The transaction was carried out in partnership with agri-finance firm Apollo Agriculture and backed by the IDH Farmfit Fund, which participated as the anchor investor.

The deal raised KES 276 million, equivalent to about $2.5 million, by packaging and selling agricultural loan receivables generated by Apollo Agriculture.

The portfolio covers 23,839 smallholder farmers across Kenya, more than half of whom are women, while roughly 22% are accessing formal credit for the first time.

The financing structure is significant because it opens a new route for institutional investors to support agriculture, a sector that has historically struggled to attract large-scale commercial capital due to high risk perceptions and limited transparency.

Analysts say the transaction could help reshape how African agricultural lending is financed, especially for smallholder farmers who are often excluded from traditional banking systems.

The securitization was arranged through Kaleidofin’s “ki” platform, which converts thousands of small agricultural loans into investment products that can be purchased by institutional investors.

The platform uses artificial intelligence, transaction histories, credit bureau information and alternative datasets to assess risk and structure loan portfolios.

Apollo Agriculture, which provides farmers with access to credit, seeds, fertilizer, insurance and advisory services, said the structure will allow it to free up capital and continue expanding lending without putting additional pressure on its balance sheet.

The company relies on satellite imagery and machine learning models to evaluate farmers who would normally lack collateral or formal financial records.

“This is a meaningful step in building efficient, scalable funding for smallholder agriculture,” said Apollo Agriculture CEO Eli Pollak.

“By converting receivables into working capital, we are able to lower our cost of funds and expand access to affordable, local currency financing for farmers.”

Industry observers note that access to financing in local currency is particularly important for farmers because it shields them from foreign exchange fluctuations that can increase repayment costs.

The transaction also received a BBB- investment-grade rating from Agusto, a development viewed as an important signal to investors that agricultural lending can become a credible asset class.

Roel Messie, CEO of IDH Investment Management, which manages the IDH Farmfit Fund, said innovative financial structures will be necessary to address long-standing funding gaps in agriculture.

“This transaction demonstrates how innovative financial structures can unlock capital for smallholder farmers at scale,” Messie said. “Building investable opportunities in agriculture requires both capital and enabling infrastructure, and this partnership brings those elements together.”

The broader initiative also received support from development finance partners working to strengthen structured finance markets in Africa.

FSD Africa assisted with legal and regulatory arrangements, investor engagement and market development, while the UK-backed MOBILIST program provided guidance on tax and transaction structuring.

Evans Osano, Chief Financial Markets Officer at FSD Africa, said the transaction could provide a model for future agriculture financing deals across the continent.

“This transaction showcases how well-functioning market infrastructure can catalyze institutional capital for sectors traditionally considered high-risk, like smallholder agriculture,” Osano said.