African Agriculture Fund L.L.C. (AAF)
Last updated 12 May 2020, by Impactyield.
AAF first closed at US$ 151 million in November 2010 with a target final closing at US$ 300 million by end 2011. The Fund’s key theme is African food production and it will target this opportunity by focusing on three sectors: primary (arable and plantations); secondary (processing and animal feeds); and services/ infrastructure (storage, fertilisers, chemicals, packaging and other inputs).
For commercial capital, the Fund has a unique structure with a class of shares (C Shares) that offers both risk mitigation and an accelerated return of capital and profit up to a 6% hurdle, afforded by the A Shares. This means that for investors in C Shares, at the point in time when they have received their capital and an annualised 6% return, the A Shares will have received no return of capital (whilst the B Shares will have only received a return of just greater than 50% of capital). The A Shares, which have been subscribed for in an amount of US$ 50 million by European Governments and West Africa Development Banks, provide a downside insulation for commercial investors seeking both a first loss protection but accompanied by the expected returns typically delivered by private equity investments.
The Fund is targeting a gross return of 17% in US$ with an 8% hurdle. Non-DFI investors are encouraged to invest through the C Shares which provide a preferred return. The result is that when the C Shares have received a return of capital and 6% hurdle, the A Shares (which effectively cede their returns to this point) will have received nothing. A:C ratio is 1:1.
Equal rights to ownership basic services technology and economic resources
Encourage companies to adopt sustainable practices and sustainability reporting
Universal access to safe and nutritious food
Sustainable food production and resilient agricultural practices
Full employment and decent work with equal pay
Increase access to financial services and markets
Key performance indicators
Asset manager: Phatisa
Product track record: Fund has 13 years of track record
Target IRR: 17%
Committed Capital: 151,000,000 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Fund domicile: Mauritius
Product status: Open - post first close
Inception year: 2009
Vintage year: 2011
Target close date: 01/12/2011
Product term: 10
Assets under management: 300,000,000 USD (US Dollar)
Investment size: Min: 5,000,000; Max: 30,000,000; Avg: 15,000,000
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 0
Fund investments to date exited or repaid: 0
Management fee: 2%
Carried interest: 20%
Hurdle rate: 8%%
GIIN Investors' Council Investment: No
Limited Partners / Investors: Agence Française de Développement (AFD) African Development Bank (AfDB) The Government of Spain through the Spanish Agency for International Development Cooperation (AECID) Banque Ouest Africaine de Développement (BOAD) ECOWAS Bank for Investment and Development (EBID) The Development Bank of Southern Africa (DBSA) Fonds d’investissement et de soutien aux enterprise en Afrique (FISEA), acting by its manager Société de Promotion et de Participation pour la Coopération (Proparco)
Limited Partner / Investor Type: Development Finance Institution (DFI), Endowments/Foundations, Family Office, Pension Funds, Other Institutional Investors
The key focus of the Fund is to produce food in Africa for African consumption. Developmental impact, without deviating from sound commercial principles, is a prominent theme within the Manager’s investment approach and the Manager will closely monitor and report annually on the Fund’s developmental achievements – a reporting matrix has been designed by the Manager along with the DFI LPs. The core impact being driven by the Fund is food security for Africa. Developmental impact is assisted through the help of a donor funded Technical Assistance Facility and investment of no less than 25% in primary agricultural production and 20% (initially US$ 30 million) set aside for SMEs through the AAF SME Fund, a sub-Fund to be independently managed.
The Fund is a socially responsible investment vehicle whose approach to business is sustainable, environmentally friendly and closely aligned with the interests of the people and communities impacted by its investments. As such the Fund operates according to a Social Environmental Management System (SEMS) that features an environmental and social risk management system, guidelines for optimal use of the technical assistance facility and, for the first time in agri business private equity, a Code of Conduct for Land Acquisition and Land Use in agricultural and agri business projects to prevent unsustainable practices.