Two former bankers from the French group BNP Paribas, Hussein Sefian and Faisal Khan, have initiated a new $100 million private debt impact fund focused on financing climate-resilient infrastructure projects in Africa, Reuters reported today.
Named Acre Impact Capital, the fund aims to address an estimated $100 billion annual infrastructure financing gap on the continent. It will provide part of the unsecured funding for projects backed by export credit agencies (ECAs).
Typically, ECAs guarantee up to 85% of a loan, requiring the remainder to be financed through private funds. However, banks have become increasingly reluctant to fund the balance, as these projects carry a higher capital charge and can be challenging to reinsure. Hussein Sefian, managing director of Acre Impact Capital, explained that nearly half of the transactions that an export credit agency would support do not materialize. "We enable a transaction that would not happen otherwise as there is no insurance capacity and banks are not able to (without it). We can come in and help them close a deal by providing that 15%, that’s really where we add value in the market," he said.
Acre Impact Capital focuses on financing projects in sectors such as renewable energy, health, food, and water. It has garnered support from the European Investment Bank (EIB), commercial banks like Standard Bank and Rand Merchant Bank, and private investors specializing in impact investing.