Group Launches $500m Investment Platform to Accelerate SDGs

Obinna Chima
A coalition of private and public sector organisations, including United Nations entities, non-governmental organisations and a private equity firm yesterday announced the launch of SDG500 – a new investment platform to help achieve the Sustainable Development Goals (SDGs).

This $500 million investment platform is the first-of-its-kind dedicated to helping achieve the SDGs. SDG500 will offer an exposure to six different underlying funds.

Each of these funds would be managed by impact asset manager Bamboo Capital Partners.
The funds would use debt and equity to invest at Seed, Series A and Series B stages in hundreds of businesses in emerging and frontier markets. SDG500 aims to address the ‘missing middle’ financing gap that affects entrepreneurs in these markets, where growth is constrained by a lack of access to follow-on financing.

“The funds will target businesses in the agriculture, finance, energy, education and healthcare sectors across Africa, Asia, Latin America, and the Caribbean and Pacific regions.
“There will also be a gender-lens focus and some of the funds will specifically invest in businesses that empower and provide jobs for women.

“The funds composing the SDG500 platform each include a catalytic first loss layer designed to encourage and protect senior tranches of funding. Initial sponsors of the catalytic layers of the funds of SDG500 include the European Union, the African, Caribbean and Pacific Group of States, the Governments of Luxembourg, Togo and Tunisia, CARE and the Alliance for a Green Revolution in Africa,” a statement explained.

The International Trade Centre had joined forces with CARE to establish the CARE-SheTrades Fund, one of the six Funds comprising the SDG500 Partnership, which will provide financing to businesses promoting gender equality through actions in the workplace, supply chain, women’s entrepreneurship and gender responsive products. With a target size of $75 million, a senior tranche of $60 million and $15 million as first loss, the CARE-SheTrades Fund would generate an expected rate of return of 7.5 per cent to harness the power of the private sector in pursuit of SDG 5 on gender equality.

The underlying six funds are: the ABC Fund, an impact investment vehicle targeting smallholder farmers and small and medium agribusinesses in developing countries; BUILD, a fixed income fund aimed at early stage enterprises in the Least Developed Countries; the CARE SheTrades Fund, a gender lens fund which will use debt and equity to invest in businesses in Asia; BLOC SmartAfrica and BLOC Latin America, venture capital funds targeting technology enterprises in Africa, Latin America and the Caribbean respectively; and HEAL, a venture capital fund investing in healthtech businesses in emerging and frontier markets.

The financing gap to achieve the SDGs in developing countries is estimated to be US$2.5 trillion per year. To achieve the SDGs by 2030, more innovative and sustainable financing solutions are required. The launch of the initiative was expected to be announced at the “SDG500 Roundtable” that took place yesterday in Davos, on the sidelines of the World Economic Forum Annual Meeting.

Commenting on the initiative, ITC’s acting Executive Director, Dorothy Tembo said: “The SDG500 platform will immediately target businesses in the agriculture, finance, energy, education, and healthcare sectors in Africa, Asia and Latin America – turbo boosting progress towards the SDGs. “Importantly, the fund has a gender focus and will invest in businesses that empower and provide jobs for women – including through the participation of ITC’s innovative SheTrades initiative, which aims to connect three million women entrepreneurs to market by 2021. We welcome the launch of this groundbreaking endeavour.”