Global Consultancy firm, Palladium, has launched its first impact fund – the Palladium Impact Fund I – to bridge the financing gap for small businesses in sub-Saharan Africa. This follows two successful direct investments, design of the world’s largest development impact bond (DIB), and three years spent developing a strong pipeline of investment opportunities.
The “Palladium Impact Fund I” is expected to raise USD 40 million to provide much-needed capital for SMEs in emerging markets. The fund, which will focus on agribusiness value chains and off-grid clean energy in Nigeria, Ghana and Kenya, aims to alleviate poverty and economically empower over 500,000 rural households. It intends to create at least 3,500 full-time jobs, of which 60 per cent will be for women.
Investors will include foundations, family offices, pension funds, and institutional investors.
Palladium will manage the fund, anchored by a $5 million investment of its own capital. The new fund will make debt and mezzanine investments of between $250,000 and $2 million into small companies.
The two direct impact investments Palladium has already made are in Naasakle, a mother and daughter-owned shea nut harvesting and processing business in Ghana, and PEG Africa, an offgrid solar energy project. Palladium says it has a further ten investments under due diligence.
According to Andrew Tillery, Head of Impact Investments at Palladium, “Fifty-four years of experience has taught Palladium that for an investment to have impact, it has to be sustainable, which means it needs to generate a financial return. For this first fund, we’ve chosen to invest in empowering African women, as women perform the majority of agricultural activities, own a third of all firms and are key to the welfare of their families. Gender equality and empowerment in the region can raise productive potential and boost the continent’s development.”
Mr Tillery added: “Solar and clean energy technology is hugely important particularly in rural Africa as it provides vital electricity to households. The social benefits are significant: for instance, 24-hour lighting enables more effective infant care and in turn can lower the infant mortality rate. It’s also the catalyst for the development of small, growing businesses as the working day is longer and more productive. Clean energy can power enabling technology, such as irrigation for farmers, to mitigate many of the risks associated with primary production like adverse weather conditions.”
Christopher Hirst, CEO of Palladium, said: “After three years investing our own capital, we feel now is the right moment to raise our first Impact Investment fund and begin to channel others’ capital to deliver impact. We’re ideally placed to use our extensive international development work and global reach to source ideas for potential, credible investment opportunities. Our relationships with USAID, DFID, DFAT, governments and private sector clients are directly relevant as we seek to ultimately bridge the gap between aid and impact investing, with Palladium as the intermediary.”
