This landmark investment makes it a truly blended fund where public sector investments help attract commercial investors. This comes as the ABC Fund is getting strong momentum with a track record of improving rural livelihoods, creating jobs and strengthening farmers’ organisations and rural small-to medium sized enterprises.
So far, more than 20 investments have been made in nine countries – Benin, Bolivia Burkina Faso, Côte d’Ivoire, Ecuador, Ghana, Kenya, Mali, and Uganda. With more impact-yielding investments in the pipeline, it is expected that other private sector actors will follow suit.
The ABC Fund is a blended-finance impact fund investing in smallholder farmers and small-to-medium sized rural agribusinesses in developing countries to support sustainable and inclusive agricultural value chains. Through its activities, the ABC Fund aims to improve the livelihoods of smallholder farmers with a particular focus on women and young people.
The blended finance structure supports an investment from Bank of America at the intermediate tranche (B-shares). All previous investors invested in the first loss tranche (C-shares) which acts as a buffer to stimulate commercial investments. The capital structure of the fund is made of three tranches of different sizes, risk-return profiles and maturity going from A to C-shares.
The Fund was initiated by the International Fund for Agricultural Development (IFAD) in partnership with, and is currently funded by investments from, the European Union, the Organization of African, Caribbean and Pacific States (OACPS), the Luxembourg Government and the Alliance for a Green Revolution in Africa (AGRA), and IFAD. The IFAD investment was made possible thanks to financial support from the Swiss Agency for Development and Cooperation (SDC).
Thouraya Triki, Chair of the Board of the ABC Fund said: “By bringing investments to promising and entrepreneurial agribusinesses and farmer’s cooperatives, the ABC Fund is not only building the sustainable value chains of today and tomorrow, but also making a real difference to the lives of thousands of rural families, women and young people. Bank of America’s backing shows how public and private sector capital can come together to deliver additional impact. This is a first-of-a-kind investment in the ABC Fund and we hope it to be the first of many.”
Dan Letendre, Managing Director, Environmental, Social and Governance, at Bank of America said: “The ABC Fund is unlocking capital to build a more sustainable agricultural sector and meet the needs of rural farmers. The Fund will help to address the impacts of climate change on rural farming as well as drive more innovation in the sector to help meet the United Nations Sustainable Development Goals. Through this investment, Bank of America is supporting higher rural employment and access to inclusive business opportunities, and a more sustainable agribusiness today and for the future.”
Jean-Philippe de Schrevel, Founder and Managing Partner of Bamboo Capital Partners, commented: “We are delighted that Bank of America has come on board at this juncture. This reflects the successful execution of the ABC Fund’s investment strategy – especially against the backdrop of the pandemic. We are delighted with this first investment from an institutional investor – which further demonstrates the crucial role of private sector engagement, the blended finance approach and that strong impact and offering commercial investments opportunities, with an adequate risk-reward profile can go hand in hand.”
Jerry Parkes, CEO of Injaro Investments, commented: “This investment from Bank of America is a resounding endorsement of the ABC Fund’s blended finance model that seeks to crowd in private commercial capital to supplement the first-loss tranche provided by mission-driven impact investors. Most importantly, this additional capital enables the ABC Fund to support more rural agricultural SMEs and farmer cooperatives. We are thrilled with this development and look forward to welcoming more private commercial investors to join us on this journey.”