AgDevCo, KfW near first close on working capital facility – exclusive

AgDevCo, the social impact investor, is fundraising for a $25 million working capital facility for the African agriculture industry alongside KfW, the Germany agency.

The facility is set to hold a first close on around $10 million to $15 million during the first quarter of next year after getting demand from a couple of social lenders and KfW, according to Chris Isaac, executive director at AgDevCo. AgDevCo will also commit to the facility that will increase to $100 million in a later stage, added Isaac.

“It is exciting as it means we will have a group of partners that have a lot of experience collectively in lending into agriculture and into Africa,” said Isaac. “So we hope we can lend profitably into a difficult part of the market.”

AgDevCo and KfW decided to launch the facility because banks were still not stepping up and providing the volumes of loans needed to help develop the “hungry” agriculture sector in many African markets, according to Isaac.

Currently AgDevCo itself provides working capital debt to the projects it later invests further in, such as Tropha Estates, the macadamia producer, but it would rather have a dedicated source to tap in future, according to Isaac.

Working capital is essential in the early stages of project development and AgDevCo uses this early stage to learn a lot about a business opportunity and help shape business plans and models, according to Isaac.

AgDevCo is a not-for-profit but invests with the aim of making a return which is then recycled into other projects.