Investment is restricted to small and medium sized companies which require risk capital to expand or to introduce new technology or production systems. Investments are made where physical conditions and/or market access create national, regional or international competitive advantage, depending on the nature of competition within the sub-sector.

AAC's investment philosophy is not to replace capital that is easily available through commercial banking sources, but to be a genuine risk capital investor. Therefore, AAC's principal focus is to identify businesses which lack a substantial asset base and/or a long term track record and are therefore unable to raise debt finance from commercial banks.

AAC places particular value on the quality of the entrepreneur and management team in assessing whether or not to pursue investment opportunities. AAC looks for entrepreneurs who want to build businesses (and management teams) rather those who are motivated by an immediate desire for financial rewards and social status.

Sponsors will also need to demonstrate:

Investment Criteria

In order to qualify for investment consideration, investee companies are required (save under exceptional circumstances) to satisfy AAC's four principal investment evaluation criteria, as follows:-

• Business Environment Criteria

- No state marketing interventions in the sub-sector
- Absence of domestic price controls on agricultural products
- No unduly restrictive regulatory burdens on the sub-sector

• Enterprise Criteria

- Segment and market growth:
- Growth trend shown in historic and forecast demand volume.
- Competitive Advantage:
Regionally competitive cost of production.
Product quality matching or exceeding regional industry standards.
- Stable prices: Increasing or stable forecast product prices.

• Performance Criteria

- Track record:
Minimum one year audited financial record.
Positive reputation with banks, suppliers and customers.
- Management team:
Professional and technical skills present in management team.
Continuity; low management and workforce turnover.
Team approach; not excessively reliant on one or two individuals.
- Growth plan:
Well-researched and realistic marketing plan.
Defensible business assumptions.
Appropriate risk-sharing financial structure.
Achievable implementation plan.

• Developmental criteria
  

- Social impact:
Overall job creation resulting from growth plan.
Skills development in rural communities.
Equal opportunities by age, gender and health status.
- Economic impact:
Benefits from economic growth accruing to rural communities.
- Environmental impact:
No apparent adverse environmental impact.

Investment products

The proportion of equity and loan depends on the characteristics of each investment. AAC may invest loan capital without an accompanying equity investment and may make equity investments without an accompanying loan investment.

A typical investment could be made up of all or any of:

AAC generally makes its investments in the functional currency of the businesses in which it invests.

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Post-Investment Management

Business development support is provided to investee companies on an as-needed basis, in order to add value to AAC's investment. This support is delivered through AAC's active investment management, utilising its financial and business management expertise, and by sourcing expert external technical business support (wherever possible through utilising Donor-funded private sector support programmes in the region) to assist management with all aspects of building a strong and successful company.

Under all normal circumstances, AAC builds into its investment agreement the right to appoint at least one Director to the Board of each investee company, together with the right to receive regular status reports, management accounts and other relevant information as required.