East Africa is projected to receive up to sh 121 billion in impact investment in the next five years and Kenya seems to be hitting the ground running as a new sh2.3 billion investment fund targeting social entrepreneurs is launched. The fund is a partnership of the AlphaMundi Group, Triodos Investment Management and development agencies from Sweden, Germany and US who have provided sh300 million as a grant to be used for business development support.
Speaking at the launch, AlphaMundi cofounder Mehboob Madhavji pointed to the presence of many small and medium-sized enterprises that can’t get a loan from local financial markets. He attributed this to their inability to meet requirements for collateral from local banks or the strict requirements of private equity banks; mainly because of being early stage ventures.
The fund will be used to invest in agribusiness and renewable energy sectors in line with impact investment principles. Impact investment is a type of investment that looks at the impact a business makes to the society in addition to financial returns as a prerequisite for investment. The two firms will take equity in the businesses they invest in, in addition to offering loans with interest rates ranging from 9 percent to 15 percent.
“If possible we would like to do it with local investors but many banks are quite conservative in the funding of social businesses in the region and it is our job to make these social businesses attractive to local investors,” said AlphaMundi Cofounder Mr Madhavji.
Founded in 2007 Switzerland based Alphumundi solely majors in impact investing with a focus on microfinance, affordable education, agriculture and renewable energy. Its portfolio includes produce distributor Twiga Foods, pay as you go solar power company M-Kopa and Honey Care. Triodos Investments, on the other hand, has a focus on sustainable investment with interests in energy and climate, arts and culture, agriculture, real state etc.