Sustainable Investment Awards 2023

Social fund of the year, Africa: Silverlands Fund II

SilverStreet Capital's Silverlands II strategy aims to yield attractive returns and create climate and social impacts for one of the most underserved groups in sub-Saharan Africa.

The private equity investor, which has offices in the UK, South Africa and Zimbabwe, invests in the agricultural and food production sectors of sub-Saharan Africa.

SilverStreet says most farming in sub-Saharan Africa is done by smallholder farmers who typically grow low-value subsistence crops with yields per hectare that are well below global averages.

Across much of the region, these farmers practice unsustainable techniques such as mono-cropping and 'slash and burn' farming. Around 60% of the population in sub-Saharan Africa typically lives on these farms and this group represents the lowest income group in these economies, according to SilverStreet.

It says increased incomes and improved sustainability, can be achieved through seed improvements, better farm management techniques, and access to markets for high-value crops.

Set up in 2016, Silverlands II has made three investments so far. One such investment is in a company in Zambia that sells seeds that help raise yields and increase tolerance to drought and disease for smallholder farmers.

Another portfolio company buys soya beans from smallholder farmers which these farmers can bring into rotation with maize, breaking the monocropping cycle, raising maize yields, and increasing incomes.

Implementing these solutions, SilverStreet says Silverlands II Fund has positively impacted 94,000 smallholder farmers, and its investments employ 4,300 people, resulting in a $27 million increase in community incomes, a 55% increase on baseline levels. Over 60% of the economic beneficiaries of the fund's strategy are women.

The fund's target internal rate of return (IRR) is 15% per annum.

"By fixing key agricultural value chains in Africa, Silverlands II has demonstrated that it is possible to scale businesses and tackle multiple key developmental challenges faced in sub-Saharan Africa," says Gary Vaughan-Smith, chief investment officer at SilverStreet.

One judge praised the fund for its "great results on improving conditions for local communities".

In addition to its impact objective, Silverlands II has implemented SilverStreet's own Responsible Investment Code and follows the IFC Performance Standards. It also releases an Annual Impact and ESG report.

SilverStreet Capital is raising a new fund to co-invest alongside Silverlands II. It will invest in its current portfolio companies and pursue additional identified investments. The final close of this fund is anticipated in 2024.