ALCB Fund signs first agriculture investment
The African Local Currency Bond (ALCB) Fund has invested XOF 2 billion ($3.3 million) in La Société de Logistique et d’Exploitation Agricole’s (SOLEA) XOF 4 billion ($6.6 million) bond issuance. The bond, with a tenor of eight years (including a three-year grace period) and a coupon of 7.2%, closed on 26 January 2023. Co-investors in the fully subscribed transaction included four local institutional investors: two asset managers, a bank, and an insurance company.
SOLEA, a subsidiary of Paris-based KKO International, operates in Côte d’Ivoire’s agribusiness sector, developing and managing cocoa trees and cocoa transformation facilities. The company aims to be among the country’s largest producers of traceable cocoa bean products. Proceeds from the bond will be used to support the expansion of cocoa processing facilities, working capital financing for factory feedstock and plantations, and plantation infrastructure capex.
This transaction marks the ALCB Fund’s first investment in agriculture and is one of only a few agriculture bond issuances on the African continent. The African Fund for Guarantee and Economic Cooperation (FAGACE), a local guarantor, provided an 80% guarantee to reassure local investors.
Karl von Klitzing, chairman of the ALCB Fund board of directors, said, ”The ALCB Fund is delighted to be part of this milestone transaction in Côte d’Ivoire and be an anchor investor. Supporting a business like SOLEA aligns closely with the Fund’s mandate, which is to channel domestic capital to developmental sectors, including responsible agriculture and agri-processing.”
Remy Allemane, chairman and founder of SOLEA, added, ”SOLEA acknowledges ALCB’s essential role in the successful completion of this important transaction. We are committed to improving the livelihoods of the communities we operate in. The proceeds from this transaction will continue to benefit low-income households and MSMEs across the cocoa value chain that we participate in.”
Founded by KFW in 2012 on behalf of the German Ministry for Economic Cooperation and Development (BMZ), the ALCB Fund’s mission is to support the development of African capital markets by promoting primary corporate bond issuances in local currency. The fund achieves this by supporting African issuers, investors, and intermediaries as an anchor investor and providing technical assistance. To date, the ALCB Fund has invested in over 35 companies across 17 countries. The fund is rated Baa2 by Moody’s and managed by LHGP Asset Management, a subsidiary of Lion’s Head Global Partners.