ACRE EXPORT FINANCE FUND I

Promoter – Financial Intermediary

ACRE CAPITAL LTD

Location

• Regional - Africa

Description

The project will support an infrastructure debt fund providing commercial loans for sustainable infrastructure projects in Africa alongside loans secured by export credit agencies.

Additionality and Impact

EIB's investment supports a newly established team to launch its first fund, aiming to support the construction of greenfield assets in Africa, while introducing best practice of environmental, social and governance ("ESG") in the transactions. The fund will address a market gap with regard to the commercial debt financing of infrastructure projects guaranteed by an OECD Export Credit Agency and will address the market failure in risk-taking that is hindering the development of greenfield assets in the target regions. It will focus on: (i) reducing negative climate and environmental externalities, mobilising investments for the reduction of carbon emissions and air pollution, as well as for climate adaptation and environmental sustainability projects, (ii) improving the efficiency of transport, logistics and trade corridors, supporting the shift to sustainable modes of transport and (iii) improving access to social infrastructure. The EIB has provided structuring input in terms of the fund strategy, E&S, climate objectives and the Fund's governance. An EIB investment will help crowding in other investors and would be seen as an essential component for the Fund to achieve a first closing. The strategy is expected to support several Sustainable Development Goals (SDGs), in particular SDG 13, 8, 7, 6 and 11.

Objectives

The Fund will finance infrastructure projects in the renewable energy, health, food and water scarcity, sustainable cities and green transportation sectors in Africa. It will provide unsecured commercial loans to complement long term loans provided by international banks that are guaranteed by Export Credit Agencies to finance sustainable greenfield infrastructure projects.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply
• Water, sewerage - Water supply; sewerage, waste management and remediation activities
• Transport - Transportation and storage

Proposed EIB finance (Approximate amount)

USD 40 million (EUR 38 million)

Total cost (Approximate amount)

USD 200 million (EUR 188 million)

Environmental aspects

Details of the Fund's environmental and social due diligence procedures for ensuring compliance with national legislation, the principles and standards of relevant EU legislation and EIB' Environmental and Social Standards as well as the capacity of the Advisor to assess and monitor environmental and social risks and impacts, will be reviewed during appraisal. The Fund will also benefit from the ECA market practices and OECD Arrangement features. As per OECD guidelines, ECAs are required to conduct detailed Environmental and Social due diligence when providing export credits for any transaction. ECAs active in the market follow a number of risk management best practices (e.g. Equator Principles, IFC Performance Standards, World Bank Safeguard Policies, etc.). The assessment of the environmental and social impacts and risks will be part of the standard due diligence process that the Fund will have to carry out for each underlying investment, thereby ensuring that the portfolio and these investments are implemented in compliance with national law and in line with the principles and standards of relevant EU environmental legislation as well as the EIB Environmental and Social Standards.

Procurement

The EIB will require the Advisor to take all requisite measures to ensure that contracts for implementation of the projects financed by the Fund have been tendered in line with the Bank's Guide to Procurement.

Status

Signed - 17/03/2023