Project detail - Accial Capital Fund 1 LLC

Who is our prospective customer?

Accial Capital Fund 1 (“ACF1”, “the Fund”), a debt fund focused on providing growth capital to technology enabled lenders active in Latin America and Southeast Asia. The fund is closed-ended with an investment period Nov 2018 – Dec 2026 and maturity date in Dec 2027. Target fund size is USD 150mln and total assets USD 76mln per 31-Dec-23. The Fund is managed by Accial Capital Management (“Accial”, “the Fund Manager”), an impact-focused investor in asset-backed “fintech” lending portfolios in emerging markets. Per YE 2023, ACF1 financed the disbursement of 1.4mln loans for a volume of USD 650mln by its portfolio clients.

What is our funding objective?

FMO is providing a USD 20mln (USD 10mln committed + USD 10mln uncommitted) 4yr senior unsecured loan to ACF1. FMO’s loan proceeds will be directed to supporting women and youth-owned/led MSMEs as well as Green loans in FMO eligible sectors and eligible countries from Latin America and Southeast Asia.

Why do we want to fund this investment?

FMO’s funding will allow ACF1 to further scale its impact the fast-growing alternative finance / digital lending sector to on-lend to borrowers that are currently underserved by traditional lenders. The debt fund reaches clients that FMO cannot target directly because they are too small or require specialized knowledge. The Fund measures its performance against the SDGs and it is 2X Challenge aligned. It specifically targets women entrepreneurs and, due to the innovative profile of the loan originators, a significant percentage of their borrowers are young entrepreneurs who otherwise struggle with accessing finance in the traditional financial system.

What is the Environmental and Social categorization rationale?

ACF1 has been classified as an E&S Category B. The categorization considers the portfolio composition of the Fund: 62% of the ACF1’s exposure is in lenders with an average loan size in their underlying portfolios > USD 10,000 and <USD 1,000,000 (SMEs per FMO definition). The remaining 38% of the portfolio is concentrated in lenders with avg loan sizes <USD10,000 represented by consumer and microfinance. While there is no high-risk activity nor bank financing with high-risk activities in ACF1’s portfolio, there is significant exposure to SMEs and two of the lenders in their portfolio could be categorized as risk category B (average loan size >25,000 & tenor > 1 year). Top exposures include 30% commerce (retail) and 32% is classified as unreported but likely includes a high percentage of diversified commerce given the business focus of the fintech lenders. Accial manages E&S risks in accordance with its Impact Policy which outlines an environmental, social, governance and impact policy for the funds managed. E&S risks are assessed using the responsible lending principles. When applicable, Accial works with borrowers to improve ESG factors by establishing an ESG action plan.