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Mikopo Structured Credit Development Fund

About the fund

Africa Medium-Term Development Structured Credit

  • The Barak Mikopo Fund (Mikopo meaning “Credit” in Swahili) focuses on providing asset-backed short- to medium-term trade, working capital and expansion capital finance to African small and medium enterprises (SMEs), in support of development.
  • The Fund’s objective is to generate sustainable risk-adjusted USD returns, targeting 12-16% per annum, on capital over the medium term (3 years), with investments that are supported by a pool of high quality collateral.
  • Credit and yield enhancement of the portfolio can be provided through a first loss underwrite: loan-to-value- approximately 80%; Barak’s conviction in ability to source quality deals is actionable through this structure. Gearing of up to 250% generates the equity enhancements as well as the profit warrants/options structure.
  • Key to fixed income type distributions is liquidity management as underlying instruments have varying maturities, all < 3 years. The open-ended structure renders investment and disbursement conducive to dividend distribution semiannually.
  • Active portfolio management is applied through a combination of fundamental research and quantitative analysis to identify short and medium term investment opportunities generating superior and sustainable returns. The research process combines a top-down and bottom-up analysis of global, regional and industry factors specific to each investment opportunity further supported by an in-depth analysis of each borrower’s underlying business and operational fundamentals. (In bold) Developmental factors are addressed on a case by case basis.
  • Barak is tapping into an opportunity set that lends itself to the investment objective: More than 50% of individuals in Africa have no access to formal financial institutions. Only about 30% of small and medium-scale enterprises, have access to credit from banks.* Development Finance seeds growth.
  • Barak’s goal is to help develop competitive trade and processing industries that optimally utilise and develop local and regional resources to supply domestic demand and increase participation in international trade. This can be achieved by expanding trading lines, production capacity and promoting value added expansionary processing activities in a manner that fosters economic inclusivity.

* Source: University of Stellenbosch Business School

Barak Mikopo Structured Credit Development Fund

50000000

Initial Target USD50 million Equity, USD125 million Senior Debt

5000000

Minimum Investments - USD 5 million, subscription monthly

365

Redemptions - Liquidity can be provided through a 365 day withdrawal notification and subject to a redemption fee. Equity lock-in period 3 years

Target Equity Returns – 12 – 16% p.a. Semi-Annually

Management Fee – 1.5% p.a. (payable monthly)

Performance Fee – 20% p.a. (payable quarterly)

Mikopo Structured Credit Development Fund Marketing Sheet

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