Innovative fund builds on 10-year track record of successfully deploying capital to invest in market-leading companies and infrastructure entities in Africa and other emerging markets
2024 Ninety One today announced the first close of its African Credit Opportunities (ACO) Fund 3, the third iteration of its Africa and emerging market focused credit opportunities strategy, in partnership with the International Finance Corporation (“IFC”), British International Investment (the UK’s development finance institution and impact investor) and the Swiss Investment Fund for Emerging Markets (‘SIFEM’, managed by responsAbility) as anchor limited partners, and with Standard Bank of South Africa as the credit provider.
ACO Fund 3’s first close has $260 million of committed capital to make private credit investments in market-leading companies and infrastructure entities in Africa and other emerging markets. Africa Development Bank (AfDB) estimates that between $130 and $170 billion is needed for infrastructure development every year but receives far less than this, leaving a substantial gap in funding of $68 to $108 billion¹ that innovative strategies like ACO have helped to close.
The ACO Fund 3 aims to provide investors with competitive return outcomes whilst simultaneously advancing economic development through sustainable capital deployment in Africa and other emerging markets. The ACO Fund 3 aims to positively contribute to the people, environment and productivity of the regions it invests in by promoting environmental and social characteristics through the application of its proprietary sustainability framework. Standard Bank has committed a debt facility of $45m in an innovative sustainability-linked loan, where the cost of funding is linked to the fund achieving certain climate/carbon and social impact targets.
This year, Ninety One’s ACO strategy celebrates its 10th anniversary since launch. The strategy has raised just under US$700m in committed capital across three fund vintages and made over $1.2 billion in investments across 82 counterparties in more than 20 countries. Almost half of these investments have been made in infrastructure and telecoms, helping the recipient countries close their infrastructure funding gaps. The strategy has achieved its return targets, whilst contributing to the UN Sustainable Development Goal 8 (Decent Work and Economic Growth) and 9 (Industry, Innovation, and Infrastructure) in about 50% of the investments.
The Fund is led by portfolio managers Steven Loubser and Kobina (Kobi) Sam, who are managing directors in Ninety One’s Emerging Market Alternative Credit (EMAC) Team. The EMAC team has a 16-year track record of managing private and alternative credit funds in emerging markets.
Nathaniel Micklem, Co-head of Ninety One Emerging Market Alternative Credit: “Along with our partners, we are very excited to be launching our 19th EM private credit fund. The strategy has a long history of supporting growth and infrastructure companies across Africa and other emerging markets. The ACO strategy has demonstrated the ability to generate stable real returns, outperforming the public and private credit benchmarks after costs, whilst developing the capital markets in which it operates.”
Kalina B. Miller, IFC’s Financial Institutions Group Regional Industry Manager for Southern Africa: “This milestone marks a significant step in our commitment to fostering private sector-led growth and job creation across Sub-Saharan Africa. By investing in market-leading companies and vital infrastructure, we aim to enhance access to finance, bridge infrastructure gaps, and improve the overall investment climate. Together, we can unlock the potential of high value-adding sectors and drive sustainable development in the region."
Anthony Njoroge, Principal and Co-Head Africa Fund of Funds, responsAbility: "This investment highlights SIFEM’s strong commitment to advancing sustainable development in Africa, with responsAbility acting as SIFEM’s portfolio manager. By providing essential capital to medium-sized enterprises, we aim to drive economic resilience, create quality jobs, and support businesses that promote both social progress and environmental sustainability. Together, SIFEM and responsAbility are dedicated to ensuring that our investments have a lasting, positive impact on Africa’s emerging markets."
Neha Bantha, Executive Vice President, Standard Bank: “We successfully financed a bespoke, sustainability-linked debt facility for ACO Fund 3, acting as the Sole Mandated Lead Arranger and Lender, Sustainability Structuring Agent, Facility Agent, and Security Trustee for the deal. This transaction showcases our alignment with Ninety One with regards to investing in market-leading, high-quality infrastructure assets in the quest to drive development in African countries, reaffirming Standard Bank’s ambition to drive the sustainable economic development of Africa and further entrenching our relationship with the broader Ninety One group.
“Our extensive footprint and vast expertise across the continent demonstrate that we see Africa's development as intricately tied to advancing its infrastructure. This facility aligns with our strategic objective to deliver innovative and market leading technology that combine our clients' sustainability strategy with our banking solutions to enhance value for our clients, businesses, and society,” Bantha concluded.
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