Institutionally-Backed Capital Infusion of $30 Million Secured by ALCB from Initial Private Investor
The African Local Currency Bond (ALCB) Fund is making strides in mobilizing private capital to support the Sustainable Development Goals (SDGs) across Africa. The fund, managed by Cygnum Capital, has a proven track record of success, with write-off ratios of less than 2% since its inception in 2012.
One of the key strategies employed by the ALCB Fund is the issuance of bonds rated Baa1 by Moody's Investors Service. This strong investment-grade rating helps build investor confidence and attracts private institutional capital from international bond markets.
The ALCB Fund's unique approach involves aligning the currency of liabilities with local business assets. This strategy enables local investors to lend in their own currency, lowering foreign exchange risk and enhancing the attractiveness and sustainability of financing.
Broader investor participation is another crucial aspect of the ALCB Fund's strategy. The fund partners with reputable financial institutions like HSBC Continental Europe to place bonds, thereby broadening the investor base and tapping into the private investment community globally to channel capital towards African markets.
The ALCB Fund's efforts are not just about short-term gains. The fund also promotes the development of local currency capital markets in African countries, helping reduce dependence on foreign currency debt and mitigating exchange rate risks often associated with foreign borrowing.
Since its inception, the ALCB Fund has deployed over $420m, backing 67 companies across various sectors in Africa. Recently, the fund raised an additional $30m (€25.6m) from an unnamed UK-based insurance company. The notes from the bond issued by the ALCB Fund are listed on The International Stock Exchange.
The ALCB Fund's strategy is not only efficient in mobilizing private capital but also supports long-term local market development, making funding more sustainable and aligned with SDG financing needs across Africa.
In summary, the ALCB Fund's strategy centers on leveraging strong credit ratings, local currency issuance, and global institutional investor participation to mobilize private capital for sustainable development in Africa. The Baa1 rating by Moody's has been instrumental in the ALCB Fund's ability to attract institutional investors, further solidifying its position as the second-highest rated Africa-focused investor, after the Africa Finance Corporation.
- The ALCB Fund's investments aim to support biodiversity and sustainable development, aligning with the Sustainable Development Goals (SDGs) across Africa.
- By issuing bonds, the ALCB Fund not only attracts private equity but also invests in affordable housing and other business sectors in African countries.
- The ALCB Fund's strategy of local currency issuance not only lowers foreign exchange risk but also enhances financial inclusion, making finance more accessible for African markets.
- Pensions and other financial institutions can contribute to the ALCB Fund's efforts, as it offers opportunities for long-term investing with a focus on development finance across Africa.
