Institutionally-backed venture: ALCB secures a $30m investment
The African Local Currency Bond (ALCB) Fund, managed by Cygnum Capital, has successfully mobilized private capital for sustainable development in Africa. The Fund, which was established in 2012, has deployed over $420 million across 67 companies on the continent, focusing on critical sectors such as financial inclusion, renewable energy, and affordable housing.
In a recent development, the ALCB Fund secured a significant investment of $30 million from an unnamed UK-based insurance company. This transaction, facilitated by HSBC Continental Europe, is the Fund’s first private institutional investment and marks an important step in broadening its investor base. The investment was rated Baa1 by Moody's Investors Service, reflecting the Fund's robust capital structure and strong financial position.
The ALCB Fund's strategy involves leveraging its balance sheet and capital structure, underpinned by development finance institutions such as KfW and FSD Africa Investments. The Fund aims to serve as an anchor investor, providing technical assistance to deepen African capital markets and reduce credit risk by matching local assets and liabilities, thereby lowering the risk of currency mismatches for issuers and investors.
The UK insurer's investment in the ALCB Fund is expected to serve as a catalyst for other investors to participate, amplifying the mobilization of private capital for development impact in Africa. According to the Fund, for every dollar invested, an additional $9.10 has been mobilized from local investors, demonstrating its success in mobilizing private capital.
Robert Anson, vice president, debt syndicate at HSBC, expressed delight in supporting the ALCB Fund in broadening its investor base and attracting institutional capital to support African markets. He added that the high credit rating and structured bond issuance have demonstrated the potential of international bond markets to engage private investors in sustainable development finance.
The notes from the bond are listed on The International Stock Exchange, further enhancing the Fund's visibility and attractiveness to potential investors. The ALCB Fund's Baa1 rating by Moody's was highlighted as a crucial factor in attracting institutional investors, according to Cygnum Capital.
The ALCB Fund, which is the second-highest rated Africa-focused investor, after the Africa Finance Corporation, is now trying to mobilize international private capital directly through the fund itself. This move is expected to further boost the Fund's capacity to support sustainable development in Africa.
[1] African Local Currency Bond Fund secures $30m investment from UK insurer. (2021, May 24). Retrieved from https://www.reuters.com/business/africa/african-local-currency-bond-fund-secures-30m-investment-uk-insurer-2021-05-24/ [2] African Local Currency Bond Fund raises $30m from UK insurer. (2021, May 24). Retrieved from https://www.afrik21.africa/en/finance/african-local-currency-bond-fund-raises-30m-from-uk-insurer/ [3] African Local Currency Bond Fund raises $30m from UK insurer. (2021, May 24). Retrieved from https://www.theafricareport.com/24155/african-local-currency-bond-fund-raises-30m-from-uk-insurer/ [4] African Local Currency Bond Fund. (2021). Retrieved from https://www.alcbondfund.com/ [5] African Local Currency Bond Fund. (2021). Retrieved from https://www.cygnum.com/alcb-fund/
- The African Local Currency Bond (ALCB) Fund, which focuses on financial inclusion, renewable energy, and affordable housing, has successfully secured a $30 million investment from a UK-based insurance company.
- This investment, rated Baa1 by Moody's Investors Service, will help the ALCB Fund expand its investor base, leveraging its balance sheet and capital structure to serve as an anchor investor in African markets.
- The ALCB Fund aims to mobilize private capital for sustainable development in Africa, with every dollar invested attracting an additional $9.10 from local investors.
- By attracting institutional capital, the ALCB Fund, which is the second-highest rated Africa-focused investor, is working to boost its capacity to support business growth, social impact, and biodiversity conservation in Africa.
