Our mission
The Annona Sustainable Investment Fund was set up in January 2009 for the purpose of investing in small
and medium-sized enterprises in Africa and Latin America by providing share capital. The Fund has two
tasks: realising a final average financial ROI of 11% and promoting the development of the private sector in a
way that helps tackle poverty. In order to fulfil these tasks, the Fund invests in companies which help improve
income levels of the poor and of the weaker groups in society. It does this, for example, by involving thousands
of small farmers and local traders, providing essential services to small market parties, or by generating
substantial direct employment.
Annona plays the role of a catalyst; on the one hand, by stepping up where commercial banks ‘chicken out’
because of a presumably excessive risk factor and on the other hand, by applying its specific knowledge of
sustainable enterprise in developing countries. This specific knowledge must ensure that investments are made
in autonomous commercial companies which are profitable both in the short and long term.
Companies that contribute towards fighting poverty by providing more and better work opportunities and
income for the poor. Annona aims to acquire an equity interest of 20% to 60% in order to, if required, actively
influence the management of the company.
Objectives
10-15 sustainable investments in medium-sized companies in Africa and Latin America
an average ROI of 11% in EUR
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What is the Fund’s target group?
Annona focuses on successful, autonomous, profit-seeking SMEs in need of extra capital in order to expand.
In addition, the Fund focuses on entrepreneurs with a clearly developed business plan who need capital for
starting up an autonomous profit-seeking company.
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Feasibility of the plan:
o Are there customers or traders who have shown real interest and are there long-term
contracts?
o Have small producers / suppliers been organised and are they reliable partners?
o Is cooperation possible with organisations which could assist in the training of personnel,
farmers and/or other suppliers?
o Is the local investment climate positive? Do local governments support the plan?
Is ownership recognised by the state?
o Are there sufficient natural resources for large-scale production?
o Does the company have knowledge of the required technologies and machines and have these
been tested and found suitable for the local conditions (easy to operate and repair)?
o Do the entrepreneurs have experience and training with regard to the product, region and
sector?
o Are there employees available who are already trained?
Availability of capital and financial performances:
o Have all shareholders invested equity capital or are they prepared to do so?
o Are other companies from the chain (buyers or suppliers) prepared to co-invest?
o Are there other investors who are prepared to invest, such as banks, NGOs and investment
funds?
o Is the current debt rate limited and acceptable?
o Is Annona being offered sufficient ownership and authority?
Scalability:
o Is an investment of EUR 300,000 to 800,000 necessary?
o Will the market and availability of raw materials and labour be sufficient to expand quickly?
o Is the business concept easily extendable to other regions and countries, or other product
groups?
Annona structure
Shareholders
Investment
KIT-SED
Committee
Annona
1-tier Board
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The investment process
What is the process, starting from the business idea, to joint participation, to the sale of the shares?
1. Quick scan
The Annona investment process starts with finding entrepreneurs with good business plans. Plans can be put
forward by so-called ‘matchmakers’, development organisations, but also directly by entrepreneurs or banks
and other investment funds in need of co-investors.
3. Business Plan
After the internal evaluation of the Concept Note, it is decided whether or not to proceed to the business plan
phase.
This phase is preceded by the signing of a Memorandum of Understanding with the proposed entrepreneur,
setting out the framework for the subsequent phases. In the Business Plan phase, an in-depth, independent
study is carried out of all basic principles expressed in the entrepreneur’s original plan. Part of this phase is an
extensive due diligence process in which the investment climate, customers, buyers, entrepreneur, assets to be
contributed and suppliers are studied in detail. A market study follows, as an extension of the chain study in the
Concept Note. The business plan is delivered along with a concrete proposal for funding and other needs of the
company which must be met.
The phases of the process up to the development of the business plan (1 to 3) are carried out or coordinated by KIT
employees.
4. Investment
In the first three years, investments are made from the start-up fund/growth fund. After that it should be clear
whether a company is progressing well and has long-term potential. Subsequently, the growth fund enables to
continue investment in companies with growth potential for another five years. After a period of eight years, the
companies – which have been assigned both local and external directors – should be financially sound. When
this happens, the external directors – who are mainly responsible for steering a company during the build-up
phase – step down. On the condition, however, that there is confidence in the quality and sustainability of the
company.
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5. Expansion and assistance
After a few years, the business concept has proved itself and a company is ready for a considerable expansion,
for which it again needs capital. A new business plan must then be developed and presented to the Annona
Investment Committee. This can then decide whether or not an additional investment will be made. If required,
KIT employees can be engaged to assist with the development of this plan. The company can also call upon KIT
for other services, such as market analysis, strategic advice and coaching, or training and organising the farmers.
6. Exit
When a company starts operating independently, the Annona Fund sells its shares, preferably to local parties.
The intention is to first offer its shares to the other shareholders. The key message is that the sale of the shares
should not hamper the social objectives of the company. Therefore, Annona will not simply sell its shares to the
highest bidder if that would harm the interests of the employees, suppliers and co-shareholders.
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Track record of results
Yiriwa SA in Mali trades in biological cotton, sesame and soy and has an approved business plan (target
30,000 farmers) @ EUR 1.6 million (Annona, ICCO, AK-O and Farmers’ Trust Fund)
4-5 business plans in design phase
We are rapidly gaining experience in pro-poor business engineering
We have a good selection procedure
Publication: Lessons from Pro-Poor Business
Publication: From Stakeholder to Shareholder, Experiences with Farmers as Shareholders
Round table conferences on risk capital and non-profit organisations