- EIB commits up to $40 million to Acre Impact Capital’s Export Finance Fund I
- First fund investing in commercial debt of export credit agencies transaction to catalyse climate-infrastructure in Africa
- Fund to support renewable power, health, food and water scarcity; sustainable cities; and green transport
- Innovative strategy provides both commercial institutional and impact investor exposure to climate infrastructure in Africa and mitigates market and significant downside risk
Addressing the urgent need for climate infrastructure investment
Export finance delivers long-term debt financing guaranteed by official export credit agencies (“ECAs”). Export finance allows project sponsors to significantly reduce the cost of debt by both obtaining very attractive funding on the ECA backed financing and obtaining long-term financing of up to 22 years. In doing so, ECAs can significantly enhance project affordability for the project sponsor and crowd-in private capital.
The new fund invests in shorter tenor commercial debt tranches where typically 15% or more of the value of the project which need to be in place before ECAs can support the remaining 85%. Whilst commercial banks generally fund the tranche guaranteed by an ECA, the availability of funding on the commercial debt tranche has been increasingly limited with the situation worsening since the COVID-19 pandemic. By providing specialist funding for this tranche, the Fund will unlock transactions and could mobilise $5.6 of private sector capital for each dollar invested.
Thomas Östros, Vice President of the European Investment Bank said: “The European Investment Bank works with leading financial partners to accelerate climate infrastructure across Africa and around the world. The EIB is delighted to partner with Acre Impact Capital and back this unique and innovative fund that aims to both help overcome a critical market gap and mobilise institutional capital for sustainable and impact focused African infrastructure and enhance gender equality.”
“We are thrilled to enter into a long-term partnership with the European Investment Bank to advance Acre Impact Capital’s mission to provide access to essential services to underserved communities and contribute to reducing the infrastructure financing gap in Africa, which is estimated to be over $100 billion every year.” said Hussein Sefian, CEO of Acre Impact Capital. “The current credit environment creates attractive opportunities for discerning investors, while addressing the urgent need for funding for essential infrastructure projects.”
Acre Impact Capital will gradually increase its presence on the ground through the opening of regional offices.
Commitment to 2X Challenge
The fund is committed to gender smart investing and seeks to ensure at least 30% of its portfolio of projects meet the 2X Criteria, increasing the number of women represented across its investment portfolio. In addition, Acre Impact Capital commits to promote and maintain gender balance at the fund manager and creating a culture that values diversity and inclusion.
Acre Impact Capital is a recipient of Technical Assistance from United States Agency for International Development (USAID)'s Scaling-Up Renewable Energy (SURE) programme to support the integration of the 2X Criteria in its investment processes.
Background information
About EIB Global
EIB Global is the EIB Group’s new specialised arm dedicated to increasing the impact of international partnerships and development finance. EIB Global is designed to foster strong, focused partnership within Team Europe, alongside fellow development finance institutions, and civil society. EIB Global brings the Group closer to local people, companies and institutions through our offices across the world.
https://www.linkedin.com/company/eib-global/
About Acre Impact Capital
Acre Impact Capital invests in climate-aligned essential infrastructure by partnering with leading commercial lenders and export credit agencies. Acre Impact Capital’s Export Finance funds address the estimated $100 billion annual infrastructure financing gap in Africa, driving economic growth and providing essential services for underserved populations.
Acre Impact Capital focuses on four thematic areas strongly aligned with the UN Sustainable development Goals: (i) Renewable Power; (ii) Health, Food and Water Scarcity; (iii) Sustainable Cities and (iv) Green Transportation. By co-investing alongside export credit agency partners, Acre Impact Capital aims to achieve risk-adjusted market-rate returns for our investors while mobilising 5.6x private sector capital for every dollar invested.
Acre Impact Capital is supported by The Rockefeller Foundation and GuarantCo, a Private Infrastructure Development Group (PIDG) company. PIDG is an innovative finance organisation funded by the governments of the UK, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC.
https://www.acre.capital/
