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London-based investment manager Acre Impact Capital has won investor commitments worth US$100mn for its inaugural fund, an export finance-focused offering that will target climate infrastructure in Africa.

Acre says the fund, which it hopes to grow to US$300mn, has attracted a diverse group of backers, including institutional investors, family offices and impact-first investors such as Trimtab Impact and Ceniarth.

Development finance institutions are also among the initial investors, including the European Investment Bank (EIB) – with a US$40mn investment – and the UK government-backed FSD Africa Investments.

Additionally, local African lenders are backing the export finance fund, such as Anglo-South African bank Investec and South Africa’s Rand Merchant Bank.

“We are incredibly proud to have received support from our limited partners, who have backed our pioneering Export Finance Fund I. The current credit environment creates attractive opportunities for discerning investors, while addressing the urgent need for funding for climate-aligned infrastructure projects,” says Hussein Sefian, Acre’s CEO.

Acre plans to invest in 15 to 20 export credit agency (ECA)-backed projects worth up to US$2bn in four broad sectors, including renewable power; health, food and water scarcity; sustainable cities; and green transport.

The fund targets the down payment portion of ECA transactions in Sub-Saharan Africa, which generally represent 15% of a project’s total value and are financed through short-term bank loans.

“While commercial banks typically fund the tranche guaranteed by an ECA… funding for the remaining 15% commercial debt tranche has been increasingly scarce. By providing specialist funding for this tranche, the fund will unlock transactions and mobilise US$5.60 of private sector capital for each dollar invested,” Acre says.

Currently, the down payment portion for ECA-backed deals involving Africa sovereigns has been reduced to 5% of a contract’s value, following a temporary rule change within the OECD Arrangement on Officially Supported Export Credits.

The so-called down payment “common line” was first introduced in 2021 and participants of the OECD Arrangement – a ’gentlemen’s agreement’ that guides the terms and conditions of agencies from across Europe, North America and Asia – have twice opted to renew on an annual basis.

European banks argue the rule – which is due to expire in late 2024 – encourages business in riskier markets, such as Africa, by reducing the down payment burden for governments looking to build infrastructure projects.

In reducing the down payment obligation to 5%, the OECD Arrangement rule allows ECAs to cover up to 95% of a project’s value.

But it has also affected local African banks which say their business activity in the down payment market has shrunk.

In 2021, Acre Impact Capital secured catalytic investment from The Rockefeller Foundation and GuarantCo, which is part of the Private Infrastructure Development Group (PIDG) and funded by the governments of the UK, Switzerland, Australia and Sweden.

Acre says its fund will be primarily involved in high-volume ECA markets in Africa, though could also target those with historically less activity.