EIB invests $40m in Acre Impact Capital’s private debt fund
The European Investment Bank (EIB) has announced a commitment of up to $40 million to Acre Impact Capital’s Export Finance Fund I. The private debt fund will invest in commercial debt of export credit agencies transactions to catalyse climate-infrastructure in Africa.
Export finance delivers long-term debt financing guaranteed by official export credit agencies (ECAs). Export finance allows project sponsors to significantly reduce the cost of debt by both obtaining very attractive funding on the ECA backed financing and obtaining long-term financing of up to 22 years. In doing so, ECAs can significantly enhance project affordability for the project sponsor and crowd-in private capital.
The new fund invests in shorter tenor commercial debt tranches where typically 15% or more of the value of the project needs to be in place before ECAs can support the remaining 85%. Whilst commercial banks generally fund the tranche guaranteed by an ECA, the availability of funding on the commercial debt tranche has been increasingly limited with the situation worsening since the Covid-19 pandemic. By providing specialist funding for this tranche, the fund will unlock transactions and could mobilise $5.6 of private sector capital for each dollar invested.
Thomas Östros, vice president of the EIB said, “The European Investment Bank works with leading financial partners to accelerate climate infrastructure across Africa and around the world. The EIB is delighted to partner with Acre Impact Capital and back this unique and innovative fund that aims to both help overcome a critical market gap and mobilise institutional capital for sustainable and impact focused African infrastructure and enhance gender equality.”
“We are thrilled to enter into a long-term partnership with the European Investment Bank to advance Acre Impact Capital’s mission to provide access to essential services to underserved communities and contribute to reducing the infrastructure financing gap in Africa, which is estimated to be over $100 billion every year,” said Hussein Sefian, CEO of Acre Impact Capital. “The current credit environment creates attractive opportunities for discerning investors, while addressing the urgent need for funding for essential infrastructure projects.”
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