UK development finance body issues RFP for new impact investing fund

Proposals sought from fund managers

CDC, the UK’s development finance institution, is seeking proposals from fund managers and other organisations for investment in a new government-backed £69m (€85.5m) impact investing fund.

CDC has issued a request for proposal (RFP) to fund managers, holding companies, non-profit organisations and other investment vehicles for investment in the DFID Impact Fund. DFID is the UK government’s Department for International Development.

It’s hoped the fund will draw in private capital into the nascent impact investment market.

“The DFID Impact Fund will invest in impact investment intermediaries providing capital to businesses and projects improving the lives of poor people in sub-Saharan Africa and South Asia,” CDC says.

It is envisaged that the fund will invest either as a limited partner in private equity funds, or by providing loans to permanent capital vehicles – although CDC is open to “innovative and flexible” financing options if they help to “crowd-in” private sector funding.The fund aims to invest up to £15m per commitment, with an exit within 10 years. Investments must comply with the CDC code on environmental, social and governance matters.

The fund will differ from CDC’s usual investment approach in that it will invest on an impact-first basis – with no set target for returns.

“All else being equal, funds prioritising social impact over financial returns will be given preference over funds focused on financial-first impact,” the RFP states. The deadline for proposals is February 8 next year.

DFID has also pledged £10.5m to support the Global Impact Investing Network (GIIN), the body which promotes impact investment.

“Britain will use its first class development expertise in partnership with the Global Impact Investment Network and CDC to kick-start private investment and help the poorest on their path out of poverty,” said International Development Secretary Justine Greening. Link