Investment
Investment risks relate to Agaciro’s asset-by-asset view of risks, leveraged to evaluate whether individual investments are performing and whether risky positions are being adequately compensated for. At the investment level, Agaciro’s risk monitoring process is conducted through a combination of financial health metrics, structural indicators, and sector-specific considerations. For equity investments, focus is placed on operating cashflow generation, revenue growth, profitability margins (including EBITDA, EBIT, and net margin), dividend yield, and the viability of exit pathways. Key illustrative alert thresholds include Debt Service Coverage Ratio (DSCR), Debt/EBITDA multiples, interest coverage falling below a threshold, and any switch from positive to negative EBITDA margin, each of which would prompt a formal review of the relevant position. For debt investments, the primary metrics tracked include average Debt-to-EBITDA on a portfolio-weighted basis, interest coverage ratios, and exposure to floating versus fixed rate instruments.
Beyond financial metrics, the Investment Department monitors a broader set of operational and structural risk indicators tailored to the nature of each investment. These include customer and counterparty concentration, working capital cycles, leverage relative to asset quality and collateral, debt service coverage and capacity utilisation. Specific attention will be paid to FX mismatches between hard-currency obligations and local-currency revenues, offtake and contractual arrangements underpinning long-dated assets, and any signals of margin compression or deteriorating asset quality that may serve as leading indicators of financial stress.
Risk monitoring is conducted on an ongoing basis by the Investment Department and reviewed by the Risk Department, with material developments reported to the Board Investment Committee at each quarterly meeting. Where a portfolio company breaches one or more alert thresholds, the Investment Department will prepare a written assessment of the risk, its potential impact on the Fund, and any proposed remedial or protective action.