The bond fund was founded in 2012 by German development bank KfW to help develop a local bond market in Africa. It has anchored bonds floated by African companies to bring in nine times more in capital, or some $3.4 billion, from local investors like pension funds, banks and insurance companies.
Now, the African Local Currency Bond Fund, or ALCB, is turning to international investors. The latest issuance, which nabbed a relatively strong Baa1from Moody’s, was floated on the International Stock Exchange. The unnamed British insurance company funded the entire $30 million bond.
The bond fund’s Brock Hoback said the transaction advanced the ALCB Fund’s strategy to mobilize private capital to meet the Sustainable Development Goals. “We’ve historically required local co-investment on every bond we support,” he said. “With this issuance, we’re now leveraging our capital structure to mobilize international institutional investors directly.”
De-risking
The 10-year bond was issued under ALCB’s Euro Medium Term Note program, a framework that allows an issuer to issue multiple debt securities over up to a decade.
ALCB Fund, which is managed by emerging markets-focused asset manager Cygnum Capital, has deployed over $420 million since 2012 in 67 companies that are driving financial inclusion, clean energy and affordable housing in Africa. It aims to reduce risk for private investors with due diligence, technical assistance for borrowers, and local-currency corporate bonds.
Green infrastructure
In a separate deal, Africa Go Green Fund, an Africa-focused green energy transition fund also managed by Cygnum, provided $18 million in senior debt to Cold Solutions Kazi in Kampala, Uganda for energy-efficient cold storage.
The facility will offer temperature-controlled packhouses for food and pharmaceutical companies that have long been constrained by infrastructure gaps.
The project, which is being developed by ARCH Cold Chain Solutions East Africa Fund, is designed to reduce post-harvest losses, improve food and pharmaceutical storage, and cut greenhouse gas emissions across Uganda’s supply chains.
