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Impact Finance Fund

About the fund

What is impact investing?

  • Impact investing is one form of socially responsible investing and serves as a guide for various investment strategies
  • Impact investments are investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social and environmental impact alongside a financial return. [Source: Global Impact Investing Network (GIIN)]
  • Impact investments can be made in both emerging and developed markets, and target a range of returns from below-market to above-market rates, depending upon the circumstances
  • Impact investing tends to have roots in either social issues or environmental issues, and has been contrasted with microfinance
  • Impact investors actively seek to place capital in businesses, nonprofits, and funds that can harness the positive power of enterprise. Impact investing occurs across asset classes; for example, private equity/venture capital, debt, and fixed income

Key Characteristics of the Barak Impact Finance Fund

  • Investment Objective: The Fund invests in commodity-based and general trade finance transactions
  • The goal of the Fund is to maintain a balanced and diversified risk exposure that is positioned to maximise investment return
  • Target Gross Return: 7 – 9%
  • No Leverage: The Fund will not employ leverage
  • Significant Investment Constraints:The Fund will not invest in any fossil fuel assets such as coal, diesel or petroleum, any metals, minerals and ores extracted from the ground, in any business where the primary business is that of extraction of minerals or any such commodities. The fund may invest in bitumen, paraffin and kerosene, fertiliser products such as urea, MAP, ammonia nitrate, CAN, phos rock and acid sulphur and sulphuric acids.

Barak Impact Investment Reporting Standards

Barak has noted the importance of sound reporting standards when it comes to Impact Investing as existing and prospective investors require this feedback to scrutinise and justify Fund investment. Barak has always stood by the notion that trade finance activities in Africa naturally create Impact Investment through the creation of trade within the continent, and in doing so help spur job creation and security, food-related security and high environmental considerations, economy stabilisation, community involvement and wellness, and corporate structural focus within borrowing companies.

The Barak Impact Finance Fund will focus on 5 areas of Impact Development Process to ensure the building blocks are laid down for effective and efficient reporting when working with borrower companies. The framework stems from the UNPRI (United Nations Principles for Responsible Investment). These 5 processes will include:

  • Data Collection
  • Data Analysis
  • Selection and evaluation
  • Testing
  • Publication and distribution

In terms of the ultimate reporting framework, Barak will adopt key takeaways from the 8 International Finance Corporation (IFC) Performance Standards, those being:

  • Assessment and Management of Environmental and Social Risks and Impacts
  • Labour and Working Conditions
  • Resource Efficiency and Pollution Prevention
  • Community Health, Safety, and Security
  • Land Acquisition and Involuntary Resettlement
  • Biodiversity Conservation and Sustainable Management of Living Natural Resources
  • Indigenous Peoples
  • Cultural Heritage

Barak Current Social Impact Fund

10000000

Impact Finance Fund Portfolio Size

850

Number of Jobs Created by the Impact Finance Fund

10

Number of Borrower Investments

Barak Social Impact Fund Ambition: End of 2018

100000000

Impact Finance Fund Portfolio Size

5000

Number of Jobs Created by the Impact Finance Fund

60

Number of Borrower Investments

Impact Finance Fund Fact Sheet

All the facts

Economic and Social Benefits Impact Investing

The Fund provides businesses, traders and entrepreneurs with bespoke trade finance and working capital solutions that are designed to assist them in both growing their businesses and feeding the continent.

1. Investment benefits

Direct asset-backed lending in Africa provides a meaningful way to diversify a portfolio by providing equity-like returns paired with the risk profile of senior secured debt

  • High fixed income-type returns with comparatively lower risk
  • Uncorrelated returns to other assets or markets
  • Attractive trading margins
  • Asset-backed lending secured by physical commodities
  • Shorter investment tenors providing liquidity benefit

2. Social Responsibility

For many, social responsibility has become a critical principle of global investing, particularly in Africa. The more proactive practices of impact and community investing can provide benefits that purely philanthropic interventions usually cannot always reach

  • Major opportunity for Africa to provide for its own food security needs, and possibly other countries’
  • Top-down financing creates a natural chain reaction that empowers Africa to build up its own economy by stimulating demand
  • Promotes market liquidity in a large, growing market
  • Addresses social and market needs created by retraction of traditional financial institutions
  • Provides opportunities to local businesses overlooked by the banking sector simply due to their size.

3. Environmental Impact

The generation of financial returns in emerging markets is increasingly being defined by not just monetary returns, but also impacts on the global environment.

  • The size and scope of Africa’s environmental problems are increasing, and impact financing is a vital potential solution
  • Agricultural and forestry account for two thirds of impact investments made in the past seven years
  • Barak has become increasingly aware of the impact that the funding to borrowers has on Africa’s land. Stringent due diligence processes to monitor this impact are implemented

4. Conclusion: Impact Investing

Barak is proud of the work that is carried out in sub-Saharan Africa and the opportunities that have been provided with our funding. However, we are aligning our returns to the larger picture in Africa’s future.

  • Barak’s funding provides opportunities to local businesses overlooked by the banking sector simply due to their size
  • Impact investing provides borrowers with the opportunities to one day be purely self-sufficient by using innovative and efficient techniques to maintain community and environment sustainability for roll-over returns