Swiss impact investment manager BlueOrchard’s acquisition of a 39.25 percent stake in a Nigerian agricultural insurer was part of efforts to raise a $100 million fund.
BlueOrchard head of private equity and sustainable infrastructure Felix Hermes told Agri Investor the InsuResilience Investment Fund, a vehicle seeded by the German state-owned development bank KfW, is roughly halfway towards its $100 million target.
Hermes declined to disclose the size of the outlay required to secure the percent stake in the Royal Exchange General Insurance Company, as well as the size of KfW’s initial investment. BlueOrchard won a tender to manage the fund several years ago.
At the time of the stake acquisition – made last month – BlueOrchard senior vice-president for private equity, Ernesto Costa, said REGIC had positioned itself to service Nigeria’s 30 million under-insured small-scale farmers, amid broader government efforts to rebalance the economy.
“Agriculture insurance is one of the new growth areas for [REGIC] and will definitely be one the core areas of growth going forward,” Costa said.
BlueOrchard’s investment is designed to increase REGIC’s underwriting capacity in agriculture, to reach the goal of insuring one million Nigerian smallholder farmers by 2025.
As a blended finance fund focused on the insurance value chain, Hermes explained, the InsuResilience Investment Fund offers public money on concessional terms to projects in the developing world. It is designed to act as first-loss capital that can help attract additional private investment.
Commitments have largely come from European insurance companies, investment firms and pension funds, though there is one US foundation in its pipeline, said Hermes.
Open to private investors in July 2017, BlueOrchard expects the fund to reach a final close by the end of 2019. Hermes declined to identify specific return targets for the vehicle beyond saying it would be “market rate.”
The fund’s investment in REGIC is designed to help it offer new protections to the 70 percent of Nigerian labor currently employed in agriculture, according to Hermes. In addition to helping it offer new crop insurance for key crops like corn, rice, cassava, sorghum and others, Hermes said REGIC will also offer protections designed to help farmers facing risks including floods, droughts, late rains and others.
The social impact of BlueOrchard’s investment, Hermes said, will be measured by the number of people earning less than $3 per day who are protected by insurance contracts.
In late July, London-headquartered global asset manager Schroders acquired a minority stake in BlueOrchard for an undisclosed sum.