Frequently Asked Questions (FAQS)

What is FAFIN?

The Fund for Agricultural Finance in Nigeria is an innovative agriculture-focused investment fund that provides tailored capital and technical assistance solutions to commercially-viable small and medium-sized enterprises (SMEs) and intermediaries across the agricultural sector in Nigeria using quasi-equity, equity and debt instruments to structure investments

Who are the fund sponsors of FAFIN?

The fund sponsors include the Nigerian Federal Ministry of Agriculture and Rural Development, the Nigeria Sovereign Investment Authority, and the German Federal Government via KfW Development Bank.

What are the objectives of FAFIN?

FAFIN was set up with a vision to catalyse agriculture-led inclusive economic growth in Nigeria and increase the amount of private capital available for agriculture in Nigeria. It was set up to demonstrate that financing the agricultural sector is commercially viable in order to increase private capital directed toward the sector. FAFIN seeks to achieve direct impact by generating employment, increasing the growth of investee company revenues, and increasing access-to-finance for agricultural sector SMEs; and also indirect impact by facilitating the inclusion of smallholder farmers as clients or suppliers of/to investee companies, increasing food security with domestic production of food for domestic consumption, reducing the amount of food imports into the country, and improving the efficiency of agricultural value chains.

In what kind of businesses does FAFIN invest?

FAFIN invests primarily in high-growth SMEs within the agricultural sector operating across different value chains and will include producers, processors, logistics and storage companies and input providers

What kind of stake does FAFIN hold in the businesses in which it invests?

FAFIN will seek to hold 25%-49% of equity in an investee company and will partner with the company to substantially scale-up the business. It may hold this equity directly through common shares or indirectly through quasi-equity instruments (convertible debentures or preferred equity). It will not seek majority shareholding.

In what ways will FAFIN exit from the companies in which it has invested?

FAFIN can exit by having a strategic investor buy its stake in the business, it can sell its stake on the stock exchange if the company goes public, or the founders of the company could buy back FAFIN’s stake.

How much can FAFIN invest in a company?

FAFIN’s target investment size is US$ 3 million – US$ 5 million. However, FAFIN can invest a minimum of US$ 500,000 and a maximum of 10% of fund size in a company.

How do I qualify to receive financing from FAFIN?

FAFIN’s focus is on agricultural SMEs that have been in operation for over 3 years and need financing for growth and expansion of their operations. FAFIN’s preference are companies that have N500 million – N5 billion in revenues, though it can consider opportunities with revenues of at least N300 million. As part of the investment process, the Fund Manager will perform an in-depth review of your company’s operations, including financial and legal due diligence, prior to making a recommendation to the investment committee. Please review FAFIN’s investment eligibility criteria and investment process for more information.

Does FAFIN invest in start-up companies?

FAFIN provides growth and expansion capital to SMEs, and is not focused on start-up companies or Greenfields. It will only consider early stage investments where the promoters and/or management team have demonstrated sector expertise by previously running companies within the same sector successfully.

How will FAFIN monitor investments?

The Fund Manager will interact with FAFIN portfolio companies in a number of ways including participating in the company’s formal governance structures, such as the Board of Directors, as well as through periodic reporting by portfolio companies.

How does the Technical Assistance Facility benefit investees?

The Technical Assistance (TA) Facility was founded for the purpose of providing grants for business development and technical assistance services to Investees. Such services are intended to promote the growth and development of portfolio investees on a need basis while mitigating many of the risks inherent in investing in agricultural SMEs. Such assistance includes providing supply chain management, extension support, and market facilitation services.

What is the relationship between FAFIN and the Technical Facility Fund?

The TA Facility will be funded separately by grants from donors, and managed by the Fund Manager with oversight by a separate TA Facility Committee established by the Fund Manager with approval by the donors to the TA Facility.

Are there geographical restrictions on investments?

The Fund is able to invest in all regions within Nigeria.

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