Bamboo Finance is moving to fill the financing gap for small- and mid-sized African agribusinesses.
The Luxembourg-based private equity firm has raised the first $10 million for its planned $50 million “Nisaba” impact fund from Louis Dreyfus Holding, a major global agriculture conglomerates. Bamboo expects to achieve a first close and begin making investments by mid-2016.
Bamboo and Louis-Dreyfus’ mission is to spur development and encourage additional private investment into Africa’s food sector, which the World Bank estimates has a market potential of $1 trillion by 2030. Africa’s home food markets are currently about one-third that size. Lack of investment capital and capacity constraints are key reasons why the sector hasn’t fulfilled its potential. Root Capital’s Lending for African Farming Co., or Lafco, is aimed at the same opportunity.
The investment thesis of the Nisaba fund, named after the Sumerian goddess of writing, learning, and the harvest, is that impact capital is needed to correct the mismatch between financing needs and available capital. The 10-year fund aims to help small- and medium-sized businessesr each scale and become commercially investable with long-term equity, quasi-equity and mezzanine debt investments. Nisaba will target deals of $3-3.5 million for five-year terms, with the intent of earning 12-14 percent gross returns on the portfolio.
Portfolio companies will also be supported through a small technical assistance fund that is being raised separately.
Nisaba’s mandate will stretch across nine East and West African countries, where the fund intends to build distribution channels for smallholder farmers, whoo perate on less than two hectares of land and make up 80 percent of African farmers.
This post was originally published on ImpactAlpha.com
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