January 24, 2020

By Lynda Kiernan

Incofin Investment Management announced it has secured another $76 million in capital commitments for its agRIF fund, a third generation fund launched in 2015 to succeed Incofin’s Rural Fund I and Rural Impulse Fund II, with the mission to address the funding gap as it applies to smallholder farmers.

Included in this raising were existing investors such as the Belgian Bank vds, the Dutch railway pension fund SPF, and the public transport pension fund SPOV, along with new investors BNP Paribas, who committed $11 million, and OeEB, the development bank of Austria, who committed $15 million.

“This success is a strong vote of confidence for our team and strategy, and a recognition of what has been achieved in the first five years of the agRIF-fund,” said Geert Peetermans, CIO Incofin. “We generated strong interest from existing and new investors.”

Through its offices in Belgium, Colombia, Kenya, and Cambodia, Incofin Investment Management is manager and advisor to funds designed to invest in microfinance institutions and rural-focused institutions in developing countries – providing credit, insurance and financial services to rural populations in underserved regions that do not typically have access to mainstream banking systems.

It also provides debt investments in agricultural SME’s and agriculturally-focused financial intermediaries, generating attractive market competitive returns for investors, while improving living conditions for people in emerging nations. 

Often sidelined by investors, smallholder farms are estimated to number 500 million worldwide, supporting more than 2 billion people, and are responsible for the majority of agricultural output in developing countries. However, due to challenges, including outdated production methods and low-yielding seeds and procedures, climate change, quality issues and the degradation of natural resources, these producers are some of the most needful of funding to ensure environmental, social and supply chain sustainability and continuance.

Like Fund I and Fund II, agRIF employs a closed-ended, leverage private equity structure to facilitate investments in financial inclusion, however, agRIF extends this model by specifically targeting investments in the agricultural sector, smallholder farmers, and micro-entrepreneurs. The fund also provides debt investments in SMEs operating in the agricultural sector and agriculturally-focused financial intermediaries.

An example of Incofin’s mission is reflected in its portfolio company Ecookim, a union of 23 cooperatives in Ivory Coast that collect and export cocoa beans from approximately 21,000 smallholders cultivating five hectares or less each. Through this union, agRIF provides financing to smallholder farming organizations, and increases income for their farmer members by securing a fair and equitable market price.

“BNP Paribas Fortis is proud to finance Incofin’s impact fund agRIF, which has a unique balanced impact thesis around financial inclusion and the agricultural value chain,” said Wilfried Remans, head of CSR & Public Affairs of BNP Paribas Fortis.

“Incofin has a strong capacity to innovate for the people at the bottom of the pyramid, with a particular focus on rural areas that we have recognized for several years, as BNP Paribas Fortis invested into one of Incofin’s funds for the first time in 2010.”

Claudia Bell, head of Microfinance and Social Business at BNP Paribas, added, “As a committed actor for financial inclusion, BNP Paribas Group has been advocating in favour of this transaction, which increases the total support brought by the Group to microfinance institutions to more than EUR 310 million. This new transaction strengthens the positions of BNP Paribas as an engaged player in microfinance and in the positive impact business.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.