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The European Investment Bank (EIB) has announced a $40 million financing to back Acre Impact Capital’s Export Finance Fund I, an innovative private debt fund, to accelerate climate infrastructure investment across Africa.

EIB said in a statement sent to Financial Nigeria that Export Finance Fund I is the first fund investing in commercial debt of export credit agencies (ECAs) transactions to catalyse climate-infrastructure in Africa.

According to EIB, the fund supports renewable power, health, food and water scarcity; sustainable cities; and green transport. It also provides both commercial institutional and impact investor exposure to climate infrastructure in Africa and mitigates market and significant downside risk.
 
“Export finance delivers long-term debt financing guaranteed by official ECAs,” said EIB. “It 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 has 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, Export Finance Fund I will unlock transactions and could mobilise $5.6 of private sector capital for each dollar invested, according to the statement.

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.”

The statement said Acre Impact Capital plans to gradually increase its presence on the ground through the opening of regional offices.

The investment firm 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. The 2X Challenge was launched at the G7 Summit 2018 as a commitment by Development Finance Institutions to collectively mobilise $3 billion in private sector investments in developing country markets over 3 years for investments that provide women with improved access to leadership opportunities, quality employment, finance, enterprise support, and products and services that enhance economic participation and access.

Acre Impact Capital commits to promote and maintain gender balance at the fund manager and creating a culture that values diversity and inclusion. The firm 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.