FMO backs ALCB fund with $10mln loan

FMO, the Dutch development bank, has agreed to back the African Local Currency Bond with a $10 million long-term loan. The fund, which was established in 2012 by the KfW Development Bank, aims to improve access to financing for the continent’s companies by mobilizing domestic capital to invest in local currency bonds. It also provides local investors such as pension funds and insurance companies with an opportunity to make long-term investments in their own currencies, helping them manage their long-term liabilities better.

The fund, which is managed by Lion’s Head Global Partners, a UK-headquartered investment and advisory firm, invests up to $5 million in any given issuance, targeting non-Sovereign bonds whose proceeds promote financial inclusion, housing finance, renewable energy, agriculture and supply chain finance. Ultimately, the fund aims to have a total of $150 million in committed capital by the end of this year, which it plans to deploy by the end of 2018.

FMO becomes the latest development finance institution to back the fund, as Vitalis Ritter, the ALCB Fund’s Director noted, saying “We now have an exceptionally strong group of dedicated shareholders and investors, including FMO, FSDA and IFC, who are joining the German Government, to continue and expand our work across the continent. The Board is excited about this demonstration of trust in and the prospects of the ALCB Fund”.

A fortnight ago, we reported that OPIC, the U.S. Government’s development finance institution, is considering a $40 million, 10-year loan to the African Local Currency Bond Fund. Source: African Capital Digest