BlueOrchard Finance AG has announced that CDC Group, UK’s development finance institution, and OFID, OPEC Fund for International Development, as well as private investors have invested in the Regional Education Finance Fund for Africa (REFFA).
The blended finance structured fund is the first fund to exclusively support the development of the education sector in Africa.
Initiated by KfW Development Bank with funding from the German Federal Ministry for Economic Cooperation and Development (BMZ), REFFA aims to provide customised financial services for the education sector and increase equal access to primary, secondary, vocational and higher education as well as enhance the quality of education.
Structured as a blended finance fund, REFFA’s capital structure consists of a junior, mezzanine and a senior tranche. The junior tranche, funded by BMZ, has been catalytic in attracting additional investors, blending public concessional capital with investments from development finance institutions (DFIs) and from private sector impact investors. CDC has committed in total $15m and already invested $4m in the mezzanine tranche. OFID has committed $5m and already invested $2m in the mezzanine tranche. Alongside CDC and OFID, BlueOrchard has invested $600,000 in the Fund’s mezzanine tranche. The two private investors have invested in the senior tranche, which benefits from a significant credit enhancement and risk mitigation as portfolio losses are firstly absorbed by junior and mezzanine investors.