ÀRGENTIL WITH $5BN IN COMPLETED TRANSACTIONS IS EXPANDING SME IMPACT FOCUS - GBENGA HASSAN
Gbenga Hassan is the Managing Partner, Àrgentil Capital Management Limited. His firm is currently raising a $95m SME fund which will expand their impact investing activities to countries in West Africa, especially Nigeria, Ghana, Liberia and Sierra Leone. He elaborates on the achievements of his firm and the nature of the impact investing landscape in Africa in this interview with TELIAT SULE.
Kindly provide an overview of Africa’s impact investing landscape with a specific focus on countries where your organisation has investments?
Impact investing refers to private capital investing which targets financial return and social/environmental objectives. The Rockefeller Foundation was a pioneer of the term while development finance institutions (DFIs) such as the International Finance Corporation (IFC) have driven the development of frameworks for setting out and measuring impact investing.
The IFC’s Operating Principles and similar frameworks from other DFIs have contributed to the momentum of impact investing. Given the important role DFIs have played with crowding in private capital investing in Africa, there has generally been an alignment of meeting impact objectives and making financial returns by private equity investors in Africa. This has further been developed with the participation of private investors, many with philanthropic mandates, who are keen to see private capital go towards supporting underserved regions/markets in a sustainable way i.e. the investment does social and environmental good and is profitable so that it can continue over time.
Africa is a good example of a continent that sees congruence between challenges and opportunities. The continent faces significant challenges related to poverty, health, education, nutrition, etc. It is home to more than 70%of the world’s poorest people, while under-five mortality rates are significantly higher than global average. Conversely, Africa has 5 countries represented in the 10 fastest growing economies and second highest GDP growth globally.
Àrgentil Capital seeks to make impact investment where clear gaps exist in Africa today including sectors such as agribusiness, consumer goods, and services, energy, and technology. Through this investment, the firm will ensure delivery of services to support reduction in hunger, provision of clean energy for power and cooking, product and services that support inclusive growth. In addition, our investments cover countries like Sierra Leone and Liberia which are underserved and fragile economies.
What is unique about Argentil Capital?
We are a firm with significant experience financing completed transactions in excess of $5 billion. Many of these have been first of a kind deals and demonstrate an innovative approach to completing transactions.
The team also has the unique experience of establishing and operating businesses in sectors in the regions we invest in, providing in-depth knowledge of what entrepreneurs and SMEs face in financing and completing deals while creating value for investors
Àrgentil’s uniqueness is captured in the following:
- Entrepreneurial experience in target sectors in the investment region
- Strong team operational experience to drive value addition for investee companies
- Team members are from key markets in the region with strong relationships and networks
- Targeting investments that adopt creative approaches to serve existing markets
For how long has your organisation been engaging in impact investing, what are your focus sectors and why those sectors?
Impact has been embedded in our investment thesis from the outset with an investment criterion focused on achieving social and environmental targets with strong financial returns. Our initial credit fund was started in 2012, to support SMEs with financing where many were unable to access lending from banks. We worked with some of the SMEs and contributed to developing their sustainable development model which involved one company joining the UN Global Compact to align its business objectives with the ten universally acceptable principles.
This has expanded to focusing on making investments in SMEs serving the lower end of the pyramid or climate change mitigation by supplying cleaner energy for power generation or cooking. We remain focused to ensure our investments stimulate economic activity, job creation, and portfolio companies have a positive impact on their ecosystems.
Viewing the impact strategy through the United Nations Sustainable Development Goal lens, our general impact objectives are linked to
Goal 1 – End poverty in all forms everywhere;
Goal 7 – Ensure
access to affordable, reliable, sustainable and modern energy for all;
Goal 8 – Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all;
Goal 9 – Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation, and
Goal 13 – Combat climate change and its impacts.
The impact strategy will also consider Goal 5 – Achieve gender equality and empower all women and girls by applying a gender lens in evaluating portfolio companies hiring practices and making recommendations for gender-balanced teams. This strategy aligns with our target sectors in Agribusiness, Consumer Goods and Services, Energy, and Technology.