AFRICA – The SDG Frontier Fund has reached its first closing at €25.3 million (US$28.78m) with the participation of nine Belgian private investors together with BIO, the Belgian Investment Company for Developing Countries.
The SDG Frontier Fund (referring to the Sustainable Development Goals of the United Nations), targets to reach €50 million (US$56.8m) in subsequent closings.
“The SDG Frontier Fund further strengthens the dynamism of Belgian Development Cooperation. It joins forces with private investors by leveraging classical development aid. The SDG Frontier Fund comes at a critical time to continue raising the financial resources needed to achieve the Sustainable Development Goals,” Alexander De Croo, Deputy Prime Minister of Belgium and Minister of Finance and Development Cooperation, said.
The SDG Frontier Fund is a self-managed co-investment vehicle which seeks to invest together with BIO in private equity funds active in Africa and Asia. Its goal is to generate an attractive financial return combined with a high development impact.
The fund will capitalize on BIO’s extensive expertise in the field since 2001, while benefiting from its services at middle and back office level. The Fund is driven by its quest to create both economic and social prosperity in developing countries, with the objective of creating sustainable livelihoods, while ensuring good governance.
The SDG Frontier Fund looks to participate in 5 to 12 funds, which in turn will invest in 10 to 15 local small and medium-sized enterprises (SMEs). This means that 50 to 180 SMEs in Africa and Asia will benefit from the fund’s support.
The ambition is to combine a high development impact with an attractive financial return, at the same time as carefully managing the risk, as demonstrated by BIO’s historical performance.
This first-of-its-kind investment fund in Belgium offers a uniquely counter cyclical opportunity to diversify an investor’s portfolio.
The SDG Frontier Fund already approved its first two investments, one of them being in Africa – the African Rivers Fund III, a, new to be established, mezzanine fund that aims at providing growth capital to approximately 35 SMEs in the Democratic Republic of Congo, Uganda and Angola, where the availability of SME finance is limited.
Currently, advanced discussions are taking place to invest in a third private equity fund in India with a specific focus on clean energy and energy efficiency.
In its first closing the SDG Frontier Fund has partnered with nine institutional and private investors, including AG Insurance, Belfius Insurance, King Baudouin Foundation, Volksvermogen, vdk bank, several family offices, and BIO.
“AG insurance is proud to be an anchor investor in the SDG Frontier Fund, not only because we were impressed by the expertise and professionalism of BIO’s team, but also because we are a responsible investor and a supporter of the UN Sustainable Development Goals,” Wim Vermeir, CIO of AG Insurance, said.
Businesses in Africa and Asia have been severely hit by the Covid-19 crisis. Emerging markets will likely be further affected by an expected decline of foreign direct investments.
In this respect, many SMEs in Africa and Asia will be in need for capital to survive the crisis, which will unlock opportunities to make long-term investments with appealing long-term returns and unprecedented development impact.
The SDG Frontier Fund will exclusively invest in selected funds that are in their startup phase. These funds will have the means to invest in quality companies in need of funding, and as such will accomplish both a positive economical and developmental impact in these current turbulent times.
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