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Charm and iGravity recently launched Charm Impact Bond (CIB), which is a blended finance bond aimed at unlocking capital for local early-stage clean energy entrepreneurs in Africa. Sponsored and seeded by iGravity’s Impact Investment Index, this bond is a $12.5 million blended finance vehicle aggregating multiple small clean energy companies into a single vehicle. This will enable access to capital that would otherwise be unattainable for impactful entrepreneurs of a certain size and at a certain stage.
The program offers entrepreneurs access to loans ranging from $12,530 – $438,443 for up to 36 months. This approach is financially inclusive and rewards companies with higher impact with lower interest rates. The finance “blend” offered by CIB is a mixture of private investor capital and subordinated capital (junior debt on each private loan or a first loss coverage at the bond level). More risk-averse investors are likely to consider these early-stage companies due to the subordinated capital de-risking the private investor capital. Charm manages the Bond, and iGravity monitors the risk, together they ensure that the diversification criteria, de-risking requirements, and impact and return are set up.
The CIB’s core objectives include a net target return of 7% p.a., a minimum investment of $125,284, a local ownership target of 85%, and female ownership/leadership of 40%. These targets will be listed in the Dusseldorf stock exchange. This bond was been structured by Encore Issuance with pro-bono legal support generously provided by Hogan Lovells.
Some initial recipients of the bond include Biomassters, Winock and Powerstove. Biomassters is based in Rwanda, it is a female-led and partly locally owned pellet cooking company. Winock and Powerstove are both Nigerian and locally owned. Winock is a solar business system distributor, and Powerstove is a clean cookstove manufacturer.
Source: ESI Africa