Impact Investment Profile

Investor

Lundin Foundation

Investee

Rent-to-Own Limited Zambia

Lundin Foundation is a private foundation that invests in small- and medium-sized enterprises in sub-Saharan Africa with high growth potential. Rent-to-Own Limited Zambia is an agricultural equipment leasing company that creates access to productivity-increasing equipment through an innovative financing structure that ultimately transfers ownership of the asset to the entrepreneur. Lundin Foundation’s equity and royalty-based loan to Rent-to-Own will provide working capital to the early stage company and support its geographic expansion.

Investor Targeted Impact

Enhance livelihoods for agricultural entrepreneurs

Investor

Name Lundin Foundation
Investor description Established in 2005, Lundin Foundation is a private Canadian foundation that invests in high growth potential small-and medium-sized enterprises in sub-Saharan Africa.

Investee

Name Rent-to-Own Limited Zambia
Sector Agriculture; Financial Services
Geography sub-Saharan Africa - Zambia
Investee business model Rent-to-Own Limited Zambia (Rent-to-Own) was founded on the belief that access to farming equipment can result in more productive and profitable micro and small agricultural enterprises in Africa. Demand for productive equipment such as ploughs, ox carts, irrigation systems, or carpenter planes in rural areas primarily comes from contract and non-contract farmers, as well as micro-enterprises operating in communities where equipment retailers, market information, and financing options are either limited or non-existent. Under typical upfront payment models, most small businesses have trouble accessing needed equipment because financing is unavailable, retailers are located far away, and the technical expertise required to operate the equipment is beyond reach. Rent-to-Own's business model addresses these barriers by distributing productive equipment to rural communities through local agents and offering technical expertise and innovative asset financing options to small businesses. As the name suggests, entrepreneurs can rent equipment from Rent-to-Own and gain ownership by the end of the rental period.
Motivations for investment Rent-to-Own was an under-capitalized, early-stage company that required technical assistance to address challenges in its corporate governance, capital structure, and working capital to finance expansion. Absent access to impact investment, Rent-to-Own's growth would have been sharply constrained.Having overcome traditional challenges related to trust, logistics, and agent incentive structures in its pilot phase, Rent-to-Own is well positioned to achieve rapid medium-term growth. Rent-to-Own reduces its own risk exposure by incentivizing repayment as the business owner works towards full ownership of the asset. The company also reduces risk for the entrepreneur because Rent-to-Own bears a portion of maintenance costs for the equipment during the rental agreement period.

Investment

Instrument Debt, Equity - Given the business's unique cash flow characteristics, Lundin Foundation structured the investment to include equity and a royalty-based loan that included interest and a monthly royalty payment based on sales.
Investment size USD 175,000
Source of deal Referral by local network
Stage of company at time of investment Early stage
Purpose of investment Lundin Foundation's investment provides capital to finance geographic expansion as well as working capital for the early-stage company.
Investment impact objectives Increase the availability and accessibility of productive assets to rural entrepreneurs through innovative asset financing, stimulating job and wealth creation.
Social and environmental metrics tracked on investment Lundin Foundation tracks several social and financial performance metrics, including IRIS metrics (IRIS alignment noted in parentheses) on this investment:Earned Revenue (IRIS aligned - FP5958)Taxes (IRIS aligned - FP7345)Gross Profit (IRIS aligned - FP7629)EBITDA (IRIS aligned - FP1657)Employee earnings, wages and commissionsUnits/Volume Sold (IRIS aligned - PI1263)New Businesses Created (IRIS aligned - PI4583)Clients (IRIS aligned - PI7094)Clients: New (IRIS aligned - PI9349)Client Individuals: Female (IRIS aligned - PI8330)Payments to Supplier Organisations (IRIS aligned - PI5478)Microentrepreneur Distributors (IRIS aligned - PI2758)Microentrepreneur Distributors: Female (IRIS aligned - PI6659)Microentrepreneur Distributors Earnings (IRIS aligned - PI4881)

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