Catalytic Fund

 

The  Beira Agricultural Growth Corridor Catalytic Fund 

What  is the Catalytic Fund?

The Catalytic Fund  is a social venture capital fund which supports early-stage  businesses, helping to ‘kick start’ commercially-viable  agriculture in the Beira corridor region of Mozambique. All  businesses must demonstrate direct benefits for smallholder farmers  and local communities.  

What  is the purpose of the Catalytic Fund?

The purpose of the  Catalytic Fund is to leverage private investment into  socially-responsible agriculture businesses, including irrigated food  crop production.  It aims to demonstrate that it is possible to  develop profitable agriculture businesses, with major social  benefits.

How  will the Catalytic Fund operate?

The Catalytic Fund  provides low-cost funding of $50,000 to $500,000 to eligible  businesses.  Recipients must agree to enter into a joint venture  with AgDevCo, the manager of the Catalytic Fund, to develop the  business opportunity. AgDevCo works closely with project sponsors to  make the business “bankable” and secure third-party debt and  equity investment as soon as possible.

What  level of financial returns does the Catalytic Fund seek?

The Catalytic Fund  seeks to recover its capital and make a financial return (likely to  be in the range 5-10% in USD terms overall) where available from  incoming commercial investors. As a revolving facility, all returns  are recycled into developing new investment opportunities. 

How  will social impacts be measured?

All Catalytic  Fund-supported projects will have monitoring and evaluation (M&E)  indicators to be tracked throughout the life of the project, e.g. the  number of jobs created, the number of local farmers engaged in the  business and the contribution of the amount of commercial finance  raised.

The Catalytic Fund  will for time to time and at its own cost commission in depth impact  studies to review the wider developmental impacts of its investments  on gender, nutrition and rural poverty.

What  are the investment criteria?

To be eligible for  Catalytic Fund funding, applications must satisfy the following  funding criteria. Applications will be assessed as follows:

     
  • Commercial  viability - 25%: All projects must be or show potential to become commercially viable  in order to ensure long-term sustainability of development benefits. 
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  • Strength of management - 25%: All projects must be able to demonstrate access to experienced and  dedicated management who are committed to spending most of their  time with the project. 
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  • Developmental  impacts - 25%: All projects supported by the Catalytic Fund must involve  significant and measurable direct benefits for local communities and  smallholder and emergent farmers (e.g. irrigation, storage,  processing, input sourcing, insurance services). 
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  •     Sponsor  contribution - 25%: Preference will be given to projects where the owners/ sponsors are  able to provide matching financial and/ or commit significant  in-kind resources (e.g. time, existing assets) during the project  start-up phase.  

In addition all  applications must demonstrate that:

     
  • Any negative environmental impacts will be avoided or minimised 
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  • Alternative commercial funding is not currently available to the project on  affordable terms 

What  standard due diligence checks will be conducted?

All applicants will  have to provide:

     
  • Certificate of commercial registration (must have been issued within the last three  months) 
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  • Company articles of association 

Reference letters  will be requested from lawyers and bankers to confirm applicants are  of good financial standing. In addition, existing businesses will  need to provide financial statements and audited financial accounts.

Who  makes the investment decisions?

Investment decisions  are taken by the independent investment committee of the Catalytic  Fund which comprises and two independent appointees of the BAGC  Partnership and two non-executive directors of the Fund Manager.

What  is the role of the manager of the Catalytic Fund?

AgDevCo is the  manager of the Catalytic Fund.  AgDevCo is a non-profit project  development company backed by charitable foundations and  international agencies. Staffed by experience private sector  investment and agribusiness professionals, AgDevCo identifies  investment opportunities and puts recommendations to the independent  investment committee.  AgDevCo has a subsidiary in Mozambique  (AgDevCo Lda) with offices and staff in Maputo and Chimoio.

Download Catalytic Fund Third Round, Stage 1 Application Form (PDF format)

Download Catalytic Fund Third Round, Stage 1 Application Form (word format)

Download Catalytic Fund Third Round, Stage 1 Cash flow (EN)

Download Catalytic Fund Third Round, Stage 1 Sources and uses of Funds  (EN)

For Beira Corridors projects please refer to the BAGC Investment Blueprint (PDF 653kb)