The African Local Currency Bond Fund, an investment vehicle established by the KfW Development Bank, announced it had received a total of $40 million in debt and equity commitments earlier in May from the IFC and Financial Sector Deepening Africa, a non-profit funded by the UK Government.
Of the $40 million, $20 million is being provided as debt by the IFC, with FSDAfrica providing the balance as equity. Once completed, the fund’s total equity will stand at almost $70 million. Ultimately, the fund aims to have a total of $150 million in committed capital by the end of 2017, which it plans to deploy by the end of 2018.
ALCB helps mobilize domestic capital in Africa to invest in local currency bonds on the continent, providing companies with access to capital. It also provides local investors such as pension funds and insurance companies with the opportunity to make long-term investments in their own currencies, helping them manage their long-term liabilities better.
The fund, which is managed by Lion’s Head Global Partners, a UK-headquartered investment and advisory firm, invests up to $5 million in any given issuance, targeting non-Sovereign bonds whose proceeds promote financial inclusion, housing finance, renewable energy, agriculture and supply chain finance.
Since its launch in 2012, ALCB has played a central role in backing 13 financial sector companies in 7 countries, deploying $42.6 million across in 19 issuances. During 2016, for every $1 invested by the fund, an additional $10.62 was provided by local investors.