Acre Impact Capital, a fledgling Africa-focused private debt firm, has received investment from the Rockefeller Foundation and GuarantCo, a subsidiary of multinational development finance institution Private Infrastructure Development Group. Acre will use this investment to launch a series of African private debt funds which will constitute “a new asset class”, the firm said. It will also consider opening an office in Nairobi.
Acre, an impact-focused investment manager launched in 2019 with a four-person team, declined to go into detail on the structure of the investment. A source with knowledge of the deal said the two investors have made hybrid debt-equity investments in a mezzanine-like structure and the investments are on “commercial terms”.
Acre will use the investments to launch a series of export finance funds for institutional investors. The firm expects to hire around eight additional staff to support the first fund and expects its team to have grown by 40 additional staff by the time it invests Fund III. The firm is also considering opening an office in Nairobi to support its portfolio more closely.
The funds will provide export finance loans for impact infrastructure projects in emerging African economies. The firm is speaking to investors for Fund I and aims for a first close towards the end of 2021. Acre declined to comment on the target size.
The London-based firm provides export finance loans – “a new asset class”, said Hussein Sefian, founding partner of Acre. Export finance loans provide capital to businesses contracted to build infrastructure in Africa. This capital tides the contractor over before it receives payment on completion of the project, Sefian said. Export credit agencies, typically backed by national governments, lend contractors 85 percent of the invoice value and Acre provides the final 15 percent.
The Rockefeller Foundation and GuarantCo have no operational or managerial involvement in Acre at this stage, but may invest as LPs in Acre’s funds, said Sefian.
“It provides investors with less risk than investing directly in government bonds or in other types of debt instruments across Africa,” said Sefian. “The fund is targeting market-rate returns in line with government bonds of a similar tenor, while compensating for lack liquidity and structure.
“Until now, institutional investors didn’t have access to these types of structures. You’re lending alongside an export credit agency representing a British or French government. That’s a significant mitigant against risk.”