Convergence has awarded proof-of-concept stage support under the Blended Finance Accelerator for Fund Managers (A4FM) to launch the USD 250 million Oryx Impact Fund-of-Funds approach designed to mobilize capital into African impact funds, while introducing blended finance features to crowd in local institutional investors, including sovereign wealth funds.
Institutional capital, particularly African pension funds and financial institutions remains under-allocated to emerging market fund managers due to perceived risk, currency volatility, limited track records, and high diligence costs despite a deep underlying opportunity set. Many institutional investors also face internal constraints around manager selection, portfolio construction, and governance which can make direct commitments to first-time or smaller emerging market managers difficult to execute. The absence of diversified vehicles with embedded risk-mitigation features further limits the ability of institutional LPs to gain exposure to the asset class at scale. In this context, a fund-of-funds approach can offer a more efficient entry point by reducing single-manager exposure, diversifying across strategies and geographies, and lowering the burden of direct diligence.
Oryx Impact is addressing this by creating a diversified fund-of-funds platform designed to reduce single-manager risk, broaden access to African impact fund managers, and lower barriers to entry for institutional investors. The vehicle is intended to channel capital across private equity, venture capital, and private debt managers financing small and medium-sized enterprises that drive quality jobs, climate resilience, and gender outcomes. The introduction of blended finance elements is intended to further improve the risk-return profile for local investors and catalyze participation from new investor segments. By combining portfolio diversification with targeted de-risking features, Oryx Impact aims to demonstrate a scalable model for mobilizing domestic and international institutional capital into the African fund ecosystem.
Design question and learning potential from the market: How can blended fund-of-funds structures reduce barriers to entry and mobilize institutional capital towards emerging market fund managers at scale?
Oryx Impact’s approach addresses the structural barriers faced by institutional investors, particularly sovereign wealth funds and pension funds, by offering a diversified, professionally managed entry point for emerging market fund managers. The fund-of-funds structure reduces single-manager risk and lowers due diligence burdens, while blended finance elements such as guarantees or first-loss capital enhance the overall risk-return profile.
Additionally, the model incorporates a technical assistance facility to strengthen underlying fund managers, improving their investment processes, governance, and impact frameworks. This dual approach of risk mitigation at the portfolio level and capacity building at the manager level aims to create a more investable ecosystem for institutional capital.
The Accelerator will support the design of the blended structure, alignment of investor requirements, and development of a scalable fundraising strategy, with a focus on catalyzing domestic institutional capital into the African fund ecosystem.
