Specialist Funds

Verdant Capital Hybrid Fund

Verdant Capital Hybrid Fund is investing hybrid capital instruments into inclusive financial institutions on a pan-African basis.  The fund is targeting a commercial return, and a developmental impact by supporting financial institutions which in turn support SMEs and micro-entrepreneurs, thereby creating jobs and livelihoods.  The fund has committed capital of USD 36 million following its first closing in December 2021 and is targeting USD 100 million by its final closing before the end of 2024.  While the fund is denominated in US Dollars it has the flexibility to invest in most local currencies and in Euros.

Verdant Capital Hybrid Fund is targeting specialist banks, microfinance institutions, leasing companies, factoring companies, fintech and other non-bank financial institutions. A strong focus will be to ensure that the investments comply with high environmental and social standards.  The fund has the flexibility to invest in a full range of hybrid instruments, including preference shares, holding company debt and subordinated debt.  For deposit-taking institutions, the fund is investing instruments that qualify for Additional Tier 1 or Tier 2 capital treatment.  Hybrid capital provides an effective intermediate capital tier that can be leveraged by local and international senior debt investors thereby “crowding in” other sources of capital. The fund is investing in North Africa, West Africa, East African and Southern Africa including South Africa and across both Anglophone, Francophone and Lusophone countries. The fund is accompanied by a USD 4.5 million technical assistance facility which will support the strengthening of operational and organisational capacity at investee institutions and forms an important part of the fund’s post-investment value add strategy.  The anchor investor is KfW Development Bank.

Debt Like

Equity Like

Subordinated debt to non-deposit taking institutions

Basel III – Tier 2 Capital

Basel II – Additional Tier 1 Capital

Basel II – Tier 2 Capital

Holding company debt

Invoice Discounting Facility

Invoice discounting is a well-established means of providing funding to SMEs in a secured and risk-mitigated manner. The invoice discounting facility has an investment allocation to Africa of USD 30 million, invested in financial institutions in facility amounts ranging between USD 1 and USD 10 million. The facility has structural flexibility to support invoice discounting, factoring and supply chain financing, and has a Pan-African mandate.

The facility provides no funding directly to SMEs. All the funding is provided to financial institutions, which can be banks and other types of deposit-taking, NBFI and speciality finance institutions. The facility can invest in financial institutions with established invoice discounting programmes, as well as institutions expanding their product mix into these areas. The facility is supported by a secure on-line cloud-based system deployed globally.

IDF

Africa Microfinance Facility

The Africa Microfinance Facility is investing senior debt funding into microfinance banks, non-bank financial institutions, credit-only institutions, leasing businesses, innovative or technology-driven credit businesses, as well as commercial banks that credibly serve SMEs. The initial facility size is USD 60 million.

The objective of the facility to increase the funding into microfinance in sub-Saharan Africa. Funding for microfinance in sub-Saharan Africa is structurally underweight compared to other regions in the developing World: sub-Saharan Africa has 25.6% of the World’s population living in low income and lower middle-income countries (LI & LMI) and only 8.0% of the World’s investment by microfinance funds.

Africa Microfinance Facility

Verdant Capital Special Sits

Verdant Capital Specialist Sits is an investing arm for investments which fall outside the scope of the unit’s other pools of capital. This Facility invests senior debt in businesses which fall outside the scope of traditional microfinance, and this can include earlier stage credit businesses with strong interest in technology-driven credit businesses.

The typical first tranche size is USD 2 – 5 million with subsequent facility amounts to the final size of USD 20 million or above.


Sub-Advisory

Verdant Capital provides sub-advisory services to global managers of private assets. Verdant Capital leverages its extensive experience across the African continent, the physical presence and local connectivity provided by its offices in five countries, extensive relationships with local and regional companies, institutions and regulators. Verdant Capital can manage the full cycle of origination, investment appraisal, portfolio management and redemption/exit. Verdant Capital has extensive experience in commercial evaluation of opportunities in both financial institutions and the real economy, as well as a fully developed toolkit in terms environmental, social and governance (ESG) evaluation and developmental impact, including versus the UN Sustainable Development Goals (SDGs). Verdant Capital’s sub-advisory offering works well with managers of specialised mandates looking to upgrade or increase their exposure to the African continent.


Grievance Procedure