Verdant Capital is raising the Verdant Capital Hybrid Fund, a USD 80 million fund to invest hybrid capital into Inclusive Financial Institutions: banks, microfinance banks, fintechs, SME-lenders, affordable housing financiers and similar non-bank financial institutions. Hybrid capital describes a range of instruments, from subordinated debt to preferred equity which are commonly used across global banking sectors, but rarely available to financial institutions in Africa. Hybrid capital instruments enable regulatory capital to be tiered according to factors such as its degree of subordination, tenor and loss-absorption capacity. Hybrid capital also provides an effective intermediate capital tier that can be leveraged by local and international senior debt investors, effectively “crowding in” other sources of capital. The fund is a Mauritian Limited Partnership with a twelve-year life. The fund is anchored by two leading European development finance institutions.
Verdant Capital Hybrid Fund
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.
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.