Rand Merchant Bank (RMB) has invested in Acre Export Finance Fund I which targets commercial debt tranches of Export Credit Agency (ECA) transactions supporting climate-aligned infrastructure in Africa.
The fund has announced its first close on April 17 in which it has successfully raised an equity of ~$100 million which will be used in part to finance projects in four impact sectors: renewable power generation, health, food and water scarcity – as well as sustainable cities and green transportation.
Aymeric Perrin-Guinot, Senior Transactor ECA Finance at RMB London said: “By providing specialist funding for the commercial debt tranche and as a result unlocking the ECA guaranteed part of the transaction, the fund will enable the mobilization of up to $2 billion toward impact projects.”
“ECA finance, by enabling access to long-term debt for borrowers in emerging markets, is seen as a key contributor to the reduction of the infrastructure financing gap in Africa, which is estimated to be over $100 billion every year.”
Siyanda Mflathelwa, Sector Head of PPPs and Concessions at RMB noted that the fund fills a specific gap in the market which is the funding of the uncovered portion of ECA transactions, which has become increasingly difficult to fund. Thereby unlocking transactions that will have a multiplier effect on the economies of the countries where it is deployed.
The IMF has recently noted that for every $1 million invested in infrastructure projects, between eight and 30 jobs are created in low income developing countries.
“In addition, the fund is expected to have a significant positive social, environmental and economic impact, underlining RMB’s own ambitions in sustainable finance and our commitment to support Africa’s transition to a lower carbon economy in line with the Paris Agreement.”
Acre Export Finance Fund will align all its investments with the UN’s 17 Sustainable Development Goals (SDGs) and leverage industry-leading frameworks for impact reporting.
Perrin-Guinot added that RMB’s investment in the fund is a great example of African banks contributing to solutions to African problems.
Hussein Sefian, CEO of Acre Impact Capital said: “RMB’s investment in the Fund demonstrates the positive role that African financial institutions are playing in supporting the financing of climate-aligned essential infrastructure in Africa. We are pleased to have received commitments from premier African investors such as RMB.”