West Africa-focused fund manager Sahel Capital has closed its debut Nigerian government-backed agriculture-focused fund on $65.9 million.
Sahel began raising the Fund for Agricultural Finance in Nigeria (FAFIN) in 2014 with an initial target of $100 million. The impact investment fund, which provides financing and technical assistance to small-and medium-size enterprises in Nigeria’s agriculture sector, has been backed by a number of international development investors including the African Development Bank, CDC, KfW Development Bank and the Dutch Good Growth Fund.
Sahel said the fund size could rise to $76 million if a proposed additional $10 million investment by KfW Development Bank is approved by the German bank’s management. KfW is a co-sponsor of the fund alongside Nigeria’s government and the country’s sovereign wealth fund.
Mezuo Nwuneli, managing partner at Sahel Capital told Agri Investor that while investing for impact the fund is also targeting commercial IRRs.
The fund targets investment of $3 to $5 million in logistics and storage companies, producers, processors and inputs providers. The fund provides quasi-equity investments to companies and also to intermediaries for on-lending to the sector, including structured royalties, convertible debt and preferred equity.
The fund has made four investments to date in dairy, edible oils, poultry and cassava businesses. Most recently it backed Crest Agro, a cassava processor based in Kogi State. The firm says its investments so far have created 500 jobs, 50 percent of which are held by women and young people.
The firm is targeting an additional nine to ten investments over the next two years as it seeks to strengthen priority value chains in Nigeria’s agri sector.