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This week, TLG Capital and IDP Foundation executed a $5 million facility to invest in Jackfruit Network, an SME based in Kenya which offers loans to low-cost private schools.
The facility brought together TLG, which provided the commercial capital, and IDP Foundation, which provided a Morgan Stanley bank guarantee. In a regional first in transaction structuring, IDP Foundation used the balance sheet of its endowment as a guarantee.
“The way that businesses like us scale is through debt,” said Rob Alhadeff, CEO at Jackfruit Network. “But it can’t be just any debt. You need partners that think carefully about what the borrower needs.”
“When I first met TLG they said that they carve out bespoke solutions for borrowers,” he continued. “I didn’t anticipate that they would actually deliver on a unique structure that the whole investor ecosystem hadn’t even done before. Most investors come to you with a pre-determined product: TLG actually listens.”
“The SME financing gap in sub-Saharan Africa is estimated at $331 billion,” said Isha Doshi, partner at TLG Capital. “As it stands, we’re not on track to meet it – Africa’s share of global venture capital funding is less than 1%.”
“Impact investors, despite being an essential part of the community, cannot meet the gap alone,” she continued. “The only way to meet the gap is to demonstrate that investors can commit capital to Africa with confidence. That’s why we’re so proud of what we’ve achieved with IDP Foundation and Jackfruit – combining Morgan Stanley’s credit risk of AA- with the transformational impact of an SME.”
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