First impact fund in Africa poised to deploy

Acre Impact Capital, the export finance market’s first impact fund in Africa, will soon start deploying funds. Hussein Sefian, Founding Partner, and Chris Mitman, Head of Export Finance at Investec*, discuss Acre Impact Capital’s strategy and its future role in the ECA ecosystem.

Many will have heard of Acre Impact Capital (‘Acre’) through its work with TXF in 2018 co-producing the first ever Sustainability Report for the export finance market, and afterwards as co-author of the ICC white paper Sustainability in Export Finance in November 2021 commissioned by the ICC Export Finance Committee of 16 banks and launched during the UN SDG Business Forum.

However, Acre is primarily a private debt impact investment manager investing in climate-aligned essential infrastructure, with a first fund focused on Africa. Specifically, Acre will fund the tied commercial loan tranches of sovereign export credit transactions.

Acre’s initial backers were The Rockefeller Foundation and the Private Infrastructure Development Group which provided the crucial development financing required to set up Acre and commence its fundraising activities.

From the outset the collective vision for Acre was to be a platform to facilitate convergence of Impact/Development/African funding sources with traditional ECA and export finance bank funding to co-finance projects in Africa and fill any gaps in the financing required.

This strategy recognises that deal by deal syndication to non-bank investors can often prove challenging as investors variously:

• May be unfamiliar with the product
• Struggle with ticket sizes (too small or big)
• Need transactions which will fund imminently
• Struggle to align the deal with their mandate, and/or
• Simply are too busy/resource constrained to execute.

Acre’s platform is designed to bring these funding sources together and to overcome some of these challenges.

For investors in the platform, a key benefit is obtaining exposure to a diversified credit portfolio in addition to the halo effect and the cross-default provisions in export credit transactions. These investors also see their investment help mobilise 15–20 impactful investments in climate-aligned essential infrastructure in Africa, which Acre will fund through the platform versus an investment in one or two transactions if they were investing directly.

For banks, Acre’s platform provides access to diversified funding options for tied commercial loan tranches they need to arrange but don’t always want to keep on their balance sheets. Acre’s role is simply to fund – not arrange – transactions and only when required, so will be a trusted non-competitive funding source.

For insurers Acre should provide a complimentary source of credit capacity as it will not require PRI, thus allowing banks to manage their use of the insurance product and leverage that capacity where needed.

By early February 2024, Acre has raised almost $100 million of funding. Its anchor investor was Investec Bank which recognised the impact the fund could have in Africa as a long time asset manager on the continent itself.

Investec has since been joined by development banks European Investment Bank, Industrial Development Corporation of South Africa and FSD Africa (FDCO/UK Government), two other African banks and a number of family offices and impact investors for this initial first close.

As anyone who has set up a fund knows, there is an enormous amount of initial outreach activity involved followed by initial and then detailed due diligence. To date, Acre has spoken to almost 600 potential investors.

What has been striking from the fundraising process is the sheer volume of development bank and impact investors who simply are not aware of (1) the export finance industry and the unique disciplines which make it suited for SDG financing (2) the opportunity for these investors to collaborate with and co-finance alongside export credit agencies and banks.

Also, there is an opportunity for these players (in particular development banks) to collaborate around project identification, development and implementation.

This theme also came through at Finance in Common Summit in 2023 – where Berne Union coordinated a panel representing banks, ECAs, credit insurers and funds (including Acre/Investec) to highlight the opportunity for collaboration. More than 520 national development banks globally were present.

In his opening comments, Rémy Rioux, Chief Executive Officer of Agence Française de Développement (AFD) and Chair of the Summit, mentioned the Berne Union presence specifically. He urged more cooperation and collaboration on origination as well as financing of projects. The Green Climate Fund also highlighted the opportunity for development banks to align their activities with the profit motives of the private sector and so realise more projects urgently.

Acre’s investors hope that the Acre platform will form the basis for similar funds to help converge funding sources and facilitate this cooperation.

*Mitman is set to be the future Head of Structuring and Origination at Acre Impact Capital.