Gazelle Fund LP


Last updated 12 May 2020, by Impactyield.

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Gazelle Finance makes growth stage investments to bridge the funding gap facing underserved SMEs in Europe and Asia including increasing wages and employment opportunities and business opportunities for small farm holders.

Gazelle Finance is establishing a $70M fund to make growth stage investments in underserved small and medium enterprises (SMEs) in the Eurasia region. Gazelle Finance is positioned to achieve a first close at a minimum of $27.5M by mid-2016 (with $27.5M committed to date). The Fund will have a second close within 1 year thereafter.

The fund will invest in ~150 fast-growing SMEs (“gazelles”) in Georgia, Armenia, Moldova, and Kyrgyzstan, in the form of income participation loans and self-liquidating equity investments, ranging $100k-$1M per deal. Gazelle Finance’s high-volume royalty finance model for SMEs is based on BPI, a reputable firm investing in Africa with $300M AUM.

The fund has a double-bottom-line goal: commercial financial returns and development impact on local economies through investee growth. While there is some DFI capital in the region to support SMEs, it is almost exclusively allocated to large commercial banks. Such capital misses fast-growing SMEs that lack the collateral banks require. Gazelle Finance’s provision of risk capital to SMEs (with <$4M in annual revenues) addresses the “missing middle,” a segment poised to drive value addition, import substitution, exports and economic growth.

Financial description

We provide a tailored, patient (5-yr) financing solution based on the SME cash flows using 2 product types: (1) Income Participation Loan (IPL): Our primary product, this is structured as a term loan with a fixed interest rate comparable to bank rates plus an income participation (% of the company’s revenues). While banks typically require collateral well over 100% of loan value, we typically require 25-50%. The income participation. component represents a premium on pricing in exchange for the higher risk profile of the loan. Denomination will be USD (though the income participation has no denomination), but local currency loans may be considered depending on future market dynamics. Target gross IRR for IPLs is 17-23%. (2) Equity investments: Minority investments with pre-agreed buyback terms. We will not invest with the intention of achieving a 3rd party exit, as this is unrealistic in the target markets; nor will it take drag-along rights. A put option will require the owners to buy back the shares progressively over years 3-5.Target gross IRR for equity investments is 25-30%.
The Fund will be close-ended, with a 10-yr life (optional 1-year extension), including a 5-year investment period (option 1-yr extension). Investment reflows will be reinvested in years 1-5. At a $27.5M fund size, the management fee will be 4%, decreasing progressively to 2.75% for a $70M fund size. Projected Net Fund IRR is 10.4% for $27.5M fund size and 13.9% for $70M.

7 years

of track record


the year funded

70,000,000 USD


Asset manager

Gazelle Finance


Headquarters location:

SDG goals

SDG targets

Promote policies to support job creation and growing enterprises

Full employment and decent work with equal pay

Increase access to financial services and markets

Key performance indicators

Fund overview

Asset manager: Gazelle Finance

Product track record: Fund has 7 years of track record

Target IRR: 10.4%

Committed Capital: 27,500,000 USD (US Dollar)

Target return category: Risk-adjusted market-rate of return

Fund domicile:

Product status:

Style/Stage: ,

Inception year: 2016

Vintage year: 2016

Target region: , , ,

Target close date: 01/06/2016

Product term: 10 year term

Assets under management: 70,000,000 USD (US Dollar)

Investment size: Min: 100,000; Max: 1,000,000; Avg: 600,000

Co-investment policy:

Currency of investments:

Currency for fund / product figures:

Fund investments to date: 0

Fund investments to date exited or repaid: 0

Management fee: 4%

Carried interest: 20%

Hurdle rate: 6%%

GIIN Investors' Council Investment: No

Limited Partners / Investors: Five investors are committed to sign on as LPs in the 1st close (1st close is anticipated for mid-2016): FMO, DGGF, KFW, Eurasia Foundation and a sovereign fund in one of the target countries. Gazelle Finance is also on path to secure optional OPIC debt financing for the fund as well.

Limited Partner / Investor Type: Development Finance Institution (DFI), Endowments/Foundations, Family Office, Pension Funds, Other Institutional Investors


E-mail: n.a.


Phone number: +1-202-413-7758

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Impact Performance


Impact thesis

The Fund seeks to deliver a double bottom line: (1) financial returns and (2) enhanced prosperity for local communities. By providing risk capital to SMEs (largely absent in the target markets) along with strategic support and technical know-how as a partner in each business, Gazelle Finance will serve the “missing middle” in its markets and enable promising SMEs to achieve growth and contribute to economic growth, through job creation, employee skills development, increased opportunities for suppliers, import substitution, increased local tax contributions, and better product/services offerings.
Management of development impact will be integrated throughout Gazelle Finance’s management of the Fund from deal screening to exit and incorporated into Fund reporting. While Gazelle Finance will first and foremost consider potential financial return, Gazelle Finance will indeed assess the development impact potential of its investees. Gazelle Finance’s focus on industries such as agribusiness, light industry, health, education, and tourism (not speculative industries such as real estate) drives the strong potential for development impact. Indicators that Gazelle Finance will track and report to investors include job creation, wage growth, percentage of rural investments, and female entrepreneurship. Gazelle Finance has integrated development impact performance metrics into its compensation structure to motivate its team to achieve a double bottom line.

Impact Management


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