Debt & Financial Institutions

Debt investments, which we make directly to companies and financial institutions as well as through funds, are an additional medium through which we capital. We have long adopted a flexible approach towards investing, and debt (in all forms) helps to enable us to meet a greater range of capital needs and direct capital towards opportunities with the greatest potential for job creation.

The need

There is a shortage of credit for private sector businesses in developing economies and this need is particularly acute in Africa and South Asia. For example, in the 2013 Doing Business Report, the IFC ranked each country in the world according to the ease with which businesses can access credit. Sub-Saharan Africa accounts for 25 of the lowest 50 ranked countries.

Types of finance

Our priority sectors are manufacturing, agribusiness, construction, financial institutions, infrastructure, health and education. We focus on all regions of Africa and South Asia where businesses have difficulty obtaining credit. In order to achieve the broadest reach to businesses of all sizes, we provide a variety of debt finance,as follows.

  • Long term loans to companies and financial institutions.
  • Risk sharing and guarantees e.g. in trade finance.
  • Debt funds.
  • Debt and capital market investments such as bonds and debentures.
  • Debt mezzanine finance such as subordinated loans (tier II capital for banks) or cash flow based loans.

Transactions have included

Au Financiers

  • We provided up to US$20m in the form of an Indian rupee denominated non-convertible debenture to Au Financiers (AUF) as part of US$60m joint facility. The facility allows AUF, an Indian non-bank finance company, to expand its core business of providing commercial vehicle finance to SMEs and also grow into new business segments.

Investec Africa Credit Opportunities Fund I

  • We committed US$30m to Africa’s first corporate debt fund, alongside FMO and others. The fund will provide long-term capital to businesses of different sizes and sectors across a wide range of countries in the region, excluding South Africa.

Indorama Eleme

  • We provided US$40m as part of wider financing package from IFC, AfDB and others. The finance provided will help build and operate a fertiliser production facility near Port Harcourt, Nigeria, along with an 84km pipeline to transport gas to the plant.

Standard Chartered Bank

  • Alongside Standard Chartered Bank, we signed a US$100 million risk participation arrangement that will help increase the availability of trade finance in developing countries. Under the agreement, the two institutions will bear the risks of local banks involved in supporting trade flows of Standard Chartered Banks’s clients.  The local banks will be able to pass on the benefits of the facility by offering trade finance to their clients who rely on trade for growth and job creation.