Fundraising

IFAD makes first private vehicle investment

The UN arm that tackles rural poverty and hunger amended its 42-year-old founding document in February 2019 so it can invest in private vehicles to enhance its scale and impact.

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The International Fund for Agricultural Development has made a $9 million commitment to the blended finance Agri-Business Capital Fund, which it helped establish in February 2019.

It is the first investment into a private sector vehicle by the UN body in its 42-year history, after changes to its founding document were also ratified in February.

The ABC Fund is managed by Luxembourg-based Bamboo Capital Partners and received a combined €50 million commitment in first loss capital upon its launch from the EU; the Organisation of African, Caribbean and Pacific States (formerly ACP); the Luxembourg government; and the Alliance for a Green Revolution in Africa.

Thouraya Triki, director of IFAD’s sustainable production, markets and institutions division, said: “The whole idea with our investment is to add another layer of first loss capital that would provide further comfort to commercial investors to come and join the fund.”

Triki confirmed to Agri Investor that the fund, which has a $200 million target, is yet to receive a commitment outside of its first loss capital component which now makes up more than 25 percent of its target size.

She added that advanced talks have taken place with a “development finance institution and a US commercial bank,” as well several family offices. Triki declined to confirm the return rates to be delivered by the fund, clarifying only that it is “not a double-digit figure.”

The ABC Fund seeks to support small holder farmers in developing countries by investing in the SMEs and agricultural cooperatives into which they sell their produce and depend on for micro loans and equipment.

The fund made its first investment at the end of 2019, placing an undisclosed sum into Ivory Coast’s Socak Katana, a cocoa cooperative with 2,700 members.

Triki said IFAD amended its founding document to allow it to invest in private sector vehicles to enhance its scale and impact, by engaging with more projects that support its central goals of fighting poverty and hunger.