The African Development Bank (AfDB) has approved a €10m ($12.63m) equity investment in the African compartment of the Moringa private equity fund.

The Moringa SICAR, currently fundraising, is an investment vehicle with a final targeted size of €100m ($126.26m), which invests in profitable larger scale agroforestry projects with high environmental and social impacts.

Sponsored by La Compagnie Benjamin de Rothschild (CBR) and ONF International (ONFI), the international subsidiary of the French Office National des Forêts, the Fund benefits from CBR back-office and investment platform, while ONFI contributes agroforestry technical expertise and regional presence in the Fund’s targeted geographies.

Moringa will invest in scalable, replicable agroforestry projects in Sub-Saharan Africa and Latin America via equity and quasi-equity investments of €4-10m.

The Fund will invest in projects that combine plantation forestry (producing biomass, fuel wood or timber) with agricultural elements (producing staple food crops for local markets and/or niche export crops) to capture most of the value chain.

“The Moringa investment strategy is well aligned with the African Development Bank’s Ten-Year Strategy (2013-2022), focusing on inclusive green growth as the pathway to sustainable development and creating broad-based prosperity, as well as the Bank’s Climate Change Action Plan, which aims to make investments to reduce the continent’s vulnerability to climate change,” said the AfDB.

“This strategic fit should allow the Bank to provide a significant boost to Moringa’s operations via its high public profile, sector expertise and network across the African continent,” added the bank.

Agroforestry generates a strong and diversified platform for the development of forestry sector businesses, whilst also paying attention to the need for agricultural production.

Smallholders benefit from an income diversification supported by an investor with a long time horizon.

The Fund will drive better land management, higher and more sustainable income for local populations, and a positive environmental impact on carbon storage, soil/water management and biodiversity.

By investing in sustainable agroforestry solutions, the Fund will assist Governments in meeting their adaptation and mitigation targets.

The Bank’s investment brings total commitments to Moringa to almost €70m and, as the first investor from the African continent in the fund, provides further validation of the fund’s African strategy and prospects as the fund enters the final fundraising phase.

The fund had its first close in August 2013 above the targeted €50m.

Hugo Ferreira, Deputy General Manager of CBR and Chairman of Moringa, said: “The forward looking strategy of the SICAR will provide a strong platform on which to develop a portfolio of profitable projects with strong environmental and social credentials.”

Hervé Bourguignon, Partner at Moringa Partnership, added that “sustainability, environmental and social impact are at the core of Moringa”.

“Not only will we produce an attractive financial return for our investors, but in our projects we will implement a partnership-based approach with local communities that will improve livelihoods and generate real, measurable environmental and social impact across our portfolio,” he said.