Institutional investor injects $30 million into ALCB's private capital
In a significant move towards sustainable development in Africa, an unnamed UK-based insurance company has invested $30m (€25.6m) in the African Local Currency Bond (ALCB) Fund. The investment was facilitated by HSBC Continental Europe, acting as a dealer, and the notes from the bond are listed on The International Stock Exchange.
The ALCB Fund, managed by Cygnum Capital, an emerging markets-focused investment bank and asset management firm, has garnered attention for its strategic approach to mobilizing private capital. The Fund anchors corporate bonds in local currency, aiming to support the development of African capital markets.
Robert Anson, vice president of debt syndicate at HSBC, expressed delight in supporting the ALCB Fund, stating that the transaction showcases how international bond markets can mobilize private investment for good. Anson also expects the bond issue to serve as a springboard for other investors to participate.
The ALCB Fund has a strong track record, having deployed more than $420m since its foundation in 2012, backing 67 companies across various sectors in Africa. The Fund's investments have achieved a remarkable 9.1x private capital mobilisation ratio. Moreover, the Fund has had write-off ratios of less than 2% since inception.
The Baa1 rating by Moody's Investors Service played a crucial role in attracting institutional investors for the ALCB Fund. The ALCB Fund shares the same Baa1 rating as the second-highest rated Africa-focused investor, after the Africa Finance Corporation.
Advancing local-currency bond markets is crucial for reducing currency risk and deepening domestic capital markets, which can help support sustainable development goals (SDGs) by providing a stable source of funding for local projects. This approach aligns with the idea of mobilizing local capital to support sustainable development.
Institutional investors are often attracted to investments that offer stable returns with low credit risk, such as local currency bonds. These investments can provide meaningful opportunities for yield and currency exposure, making them appealing for diversification.
Incorporating ESG (Environmental, Social, and Governance) criteria into investment strategies can enhance appeal to institutional investors focused on sustainable development. Offering a diversified portfolio that includes fixed income and fixed income-like assets can help mitigate risk, attracting institutional investors seeking stable returns.
The ALCB Fund aims to tap local institutional investors as a source of funding, aligning with the strategy of mobilizing local capital to support sustainable development. Hoback, a representative of the ALCB Fund, stated that the local currency mandate reduces credit risk, further increasing its appeal to investors.
Sources:
- African Local Currency Bond Fund Raises $30m from UK Insurance Company
- Investing in Emerging Markets: Strategies for Success
- T. Rowe Price Emerging Local Markets Bond Fund
- Alternative Investments in Africa: A Growing Trend
- Advancing Local Currency Bond Markets in Africa
- The investment of $30m by an unnamed UK-based insurance company in the African Local Currency Bond (ALCB) Fund, a strategic approach to mobilizing private capital, aims to support the development of African capital markets, providing a stable source of funding for local projects and aligning with the sustainable development goals (SDGs).
- The ALCB Fund, managed by Cygnum Capital, has a strong track record, having deployed over $420m since 2012, backing 67 companies across various sectors in Africa, with a remarkable 9.1x private capital mobilisation ratio and write-off ratios of less than 2% since inception.
- The ALCB Fund, with its local currency mandate, aims to tap local institutional investors as a source of funding, incorporating ESG criteria into its investment strategies to enhance appeal to institutional investors focused on sustainable development and offering a diversified portfolio that includes fixed income and fixed income-like assets to mitigate risk and attract stable returns.
