Barak Fund Management, an alternative credit financier in Africa, has added another working capital fund to its offering.
The financier has been appointed the new manager of the Lending for Africa Farming Company (LAFCo), a working capital facility dedicated to agricultural SMEs in Sub-Saharan Africa.
The fund, which was previously managed by Root Capital, will become the third dedicated impact finance fund managed by Barak.
LAFCo provides working capital and trade finance facilities for smaller agricultural companies, particularly those operating in local and regional value chains, which typically struggle to access financing through their banks.
The fund has been operating for the past three years, extending 13 loans to agribusinesses and reaching more than 129,000smallholder farmers. Typical LAFCo loans are worth between US$500,000 and US$3mn, with the opportunity to syndicate for larger facilities. The fund is also able to offer local currency loans in some countries.
German development bank KfW, and AgDevCo, a specialist investor in African agribusinesses, are the main investors in the fund.
AgDevCo notes in a statement that LAFCo currently has funding of US$20mn from the two parties, with the aim of growing the facility “above US$50mn in the next few years as other investors come on board”.
“With Barak, we have a very experienced fund manager to take LAFCo into its next phase,” says Lars Zimmermann, principal project manager at KfW. “At a time when there is volatility in trade finance markets, the need for a dedicated agricultural facility for African SMEs is greater than ever.”
Prieur du Plessis, Barak’s chief investment officer, adds: “We see multiple opportunities across Africa to improve the availability of trade finance for SMEs that engage with smallholder producers.”
Barack has been operating since 2008 and has to date provided over US$4bn in funding to SME businesses in more than 30 countries across Africa. It manages a range of funding structures including both impact and sharia-compliant funding.