Month: May 2021

GuarantCo, through the Private Infrastructure Development Group Technical Assistance, and The Rockefeller Foundation have provided Acre Impact Capital with catalytic funding to make debt investments in infrastructure projects that provide access to essential services to vulnerable populations in Africa.

  May 2021

Leveraging the proceeds from the catalytic funding, Acre Impact Capital will launch a series of private debt impact investment funds focused on infrastructure sectors such as healthcare, education, social housing, transport, renewable power, agriculture, water & sanitation, waste management, climate adaptation and technology / digital infrastructure. By investing alongside long-established export credit agencies (ECAs), the funds will address a key financing gap in the market, unlocking transactions and mobilising up to USD 5.6 of capital for each dollar invested. The funds aim to achieve risk-adjusted market-rate returns, while minimising the risks often associated with developing infrastructure in emerging markets.

By originating transactions which are aligned with PIDG and GuarantCo’s development impact goals, Acre Impact Capital will allow ECAs to operate in support of the UN Sustainable Development Goals, while encouraging trade and job creation in their home countries. ECA finance is mostly arranged by a few international banks.  Acre Impact Capital will support the ability of local banks in Africa to operate in the export finance market, partnering and providing hard currency funding where needed. For borrowers seeking to manage foreign exchange risk, Acre Impact Capital will open opportunities for local currency co-finance which will be supported by GuarantCo, including GuarantCo’s tenor extension guarantees.

Lasitha Perera, CEO of GuarantCo, said: “This transaction is a great example of complementary public sector and philanthropic partnership joining forces to work together towards a common goal and where blended finance can mobilise commercial sources of finance to support the SDGs.  It demonstrates the strength of the PIDG group working closely together with The Rockefeller Foundation in order to deliver essential infrastructure to drive economic growth and sustainably build a more prosperous future for people in Africa who need it most.”

Maria Kozloski, Senior Vice President of Innovative Finance at The Rockefeller Foundation, said: “We are excited about the potential of Acre Impact Capital’s high impact and innovative strategy, which leverages the ECA market to mobilise largescale capital and address the huge financing gap for emerging market infrastructure.” 

Emilio Cattaneo, Director of PIDG Technical Assistance, said: “We are delighted to have been associated with the Acre Impact Capital project since its inception and to have supported the team in the development of such an innovative concept together with our friends at The Rockefeller Foundation. Through the use of  PIDG Technical Assistance funding, we are proud to have been able to contribute to the initial capital required to enable Acre Impact Capital to be launched which demonstrates the power of strong partnerships and collaboration in delivering sustainable infrastructure in the countries where we can make a real difference.” 

Hussein Sefian, Founding Partner of Acre Impact Capital, said: “We are thrilled to enter into a long-term partnership with aligned investors such as The Rockefeller Foundation and the Private Infrastructure Development Group, through GuarantCo, to advance Acre Impact Capital’s mission to provide access to essential services to underserved communities and contribute to reducing the infrastructure financing gap in Africa which is estimated to be over USD 100 billion a year. Our Export Finance funds will provide institutional and impact investors with exposure to a new asset class – export finance loans – while promoting the financing of sustainable and socially impactful infrastructure.”

Notes to editors

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, and France through a stand-by facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development. www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 157 infrastructure projects to financial close and provided 209 million people with access to new or improved infrastructure. PIDG is funded by six governments (the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org

About PIDG Technical Assistance

PIDG Technical Assistance (TA) can provide technical assistance and capital grants to the PIDG companies to meet a range of needs associated with an infrastructure project’s life-cycle. PIDG TA can also provide up-front viability gap funding grants to support PIDG projects that require concessional funding to make a project with strong development impact financeable.

About The Rockefeller Foundation

The Rockefeller Foundation advances new frontiers of science, data, and innovation to solve global challenges related to health, food, power, and economic mobility. As a science-driven philanthropy focused on building collaborative relationships with partners and grantees, The Rockefeller Foundation seeks to inspire and foster large-scale human impact that promotes the well-being of humanity throughout the world by identifying and accelerating breakthrough solutions, ideas, and conversations. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.

About Acre Impact Capital

Founded in 2019, Acre Impact Capital invests in growth-stage, climate-aligned infrastructure in emerging markets by partnering with leading commercial lenders and export credit agencies. Our Export Finance funds address the estimated $100 billion annual infrastructure financing gap in Africa, driving economic growth and providing essential services for underserved populations. By co-investing alongside well-established export credit agency partners, we aim to achieve risk-adjusted market-rate returns for our investors while mobilising up to 5.6x private sector capital for every dollar invested. Our strong relationships and partnerships with key players in the export finance ecosystem provide us with privileged access to a diverse pool of curated opportunities across Africa. To find out more, visit: www.acre.capital

Global Affairs Canada (GAC), a department of the Government of Canada, is providing CAD 40 million (c. USD 31.8 million) through a repayable contribution to Private Infrastructure Development Group (PIDG) company, GuarantCo, to enhance affordable and sustainable infrastructure credit solutions in low-income countries and fragile states across Africa and Asia. The funding will be used to finance essential infrastructure, develop local capital markets and help economies grow by mobilising additional capital towards the Sustainable Development Goals (SDGs) aiming to reduce poverty.

May 2021

The partnership will help to support PIDG’s and GuarantCo’s gender-responsive approach to infrastructure investment in alignment with Canada’s Feminist International Assistance Policy. PIDG and GuarantCo view the Canadian government’s strong gender advocacy as a significant benefit allowing PIDG to further enhance its gender policies and processes. GuarantCo contributes to the implementation of the PIDG Gender Equity Action Plan and the collaboration with GAC will further accelerate progress.

This initiative will help to demonstrate that investments in low-income countries and fragile states are not only possible but that they can mobilise significant additional private capital towards the SDGs to ensure sustainable and inclusive economic growth.

The Honourable Karina Gould, Canada’s Minister of International Development, said: “This initiative with GuarantCo is a key opportunity to address the financing gap in infrastructure in Africa and Asia by mobilizing  private sector investment.”

Emily Bushby, Interim CEO of GuarantCo, said: “We are proud that Canada has decided to invest in GuarantCo, particularly to support PIDG and its companies to further build and implement its gender equity agenda. The investment will enable GuarantCo to leverage this facility three times to mobilise a portfolio of up to CAD 120 million (c. USD 95 million) of guarantees. It will provide increased capacity to grow GuarantCo’s portfolio, enabling us to achieve our strategic and development objectives with the associated positive impact to our external stakeholders, including ratings agencies, to further diversify our funding base.”

Philippe Valahu, CEO of PIDG, said: “We are delighted that the Canadian Government is investing in GuarantCo. We are particularly pleased that this investment aims to enhance gender initiatives.  As a group, PIDG has developed a robust Gender Equity Action Plan which provides us with a roadmap for continuous improvement in our investments and in our companies. PIDG is adopting a deliberate climate and gender lens to screen both risks and potential of its infrastructure investments and we are looking forward to working closely together with GAC to accelerate gender inclusivity further the global gender agenda.”

Notes to editors

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development. www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 171 infrastructure projects to financial close which provided an estimated 223 million people with access to new or improved infrastructure. PIDG is funded by six governments (the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org

About Global Affairs Canada

Global Affairs Canada (GAC), a federal department of the Government of Canada, defines, shapes and advances Canada’s interests and values in a complex global environment. The Department manages diplomatic relations, promotes international trade and provides consular support. It leads international development, humanitarian, and peace and security assistance efforts. GAC also contributes to national security and the development of international law.

GuarantCo provided PRAN Agro, part of PRAN -RFL Group, with a 100 percent guarantee of a BDT 2.1 billion (c. USD 25 million) on-shore bond with a seven year tenor to attract domestic institutional capital from Bangladesh and support PRAN Agro’s expansion plans.

May 2021

GuarantCo, a Private Infrastructure Development Group (PIDG) company, enabled a pioneering and transformational structure for the bond realising various firsts for the Bangladeshi market: the first blended finance structured bond of its kind; the first to be subscribed by an international insurance company and the country’s first directly issued digitised bond under Private Placement of Debt Securities Rules; no development finance institution has ever guaranteed a bond of this kind in Bangladesh.

GuarantCo’s partnership with MetLife and Riverstone Capital has been instrumental in working with various stakeholders and regulators to execute the transaction that will have a transformational impact on development of debt capital market in Bangladesh.

The proceeds from the bond guaranteed by GuarantCo will enable PRAN Agro’s expansion plans including land development, construction, storage facilities and processing machinery. The expansion is expected to result in over 20 percent increased sourcing from local farmers, contributing to rural income and food security which is critical during the COVID pandemic and high on the Government of Bangladesh’s agenda. In a period where many people have lost their jobs, additional investment into PRAN Agro will also provide much needed job security to both current and future employees.

In Bangladesh, one of the world’s fastest growing economies over the last decade,  the agriculture sector is a key sector contributing to employment and share of GDP. A key part of PRAN Agro’s strategic plan is to meet increasing demand for processed agricultural products, both locally and overseas, and invest in both expanding its production lines and work force to grow the business in order to fuel economic growth in Bangladesh.

Emily Bushby, Interim CEO at GuarantCo, said: “We are proud to have closed our second transaction in Bangladesh and support the Government to make a contribution to the country’s growing economy and increasing demand for processing local and overseas agricultural products whilst providing employment for local people including women.  Given that no Bangladeshi company has ever raised any local currency bond financing with the assistance of a DFI and that Bangladesh has only had three listed bonds in the on-shore market, GuarantCo’s transaction with PRAN Agro will have a significant demonstration effect that will support the development of the debt capital markets. It will demonstrate another source of funding for businesses seeking to raise financing for infrastructure projects from which the local people in Bangladesh will benefit. GuarantCo is proud to have worked on this landmark transaction for Bangladesh and is grateful to policy makers in Bangladesh (BSEC, Bangladesh Bank and others) to have supported us all along despite a number of unforeseen circumstances most notably brought in by COVID pandemic.”

Uzma Chowdhury, CPA Director Finance at PRAN Agro, said “With the issue of this bond, PRAN Agro Limited has established an alternate source of funding that can attract investors to the Bangladesh capital markets.  Bangladesh, a nation of tremendous opportunity, is creating the investment opportunity with an innovative solution ensuring deeper financial markets, advancement of rural economy and enhanced sustainability. We thank our partners including BSEC, Bangladesh Bank and all other authorities for their support in achieving this milestone in the middle of the pandemic.”

Ala Ahmad, General Manager at MetLife Bangladesh, said: “MetLife’s investment in this landmark bond is testament to our confidence in the growth potential of Bangladeshi companies as well as MetLife’s unique expertise in advanced investment and portfolio management.”

Notes to editors

In April 2019, GuarantCo launched the findings of its Study of Bangladesh Bond Market at the Local Capital Market Infrastructure Financing Conference, co-hosted with the Dhaka Chamber of Commerce & Industry (DCCI) and attended by Mr. Salman F. Rahman, MP, Honourable Private Industry and Investment Adviser to the Prime Minister. The Bond Study, funded by PIDG Technical Assistance, was commissioned by GuarantCo to assess the challenges relating to an active bond market for infrastructure projects and to identify possible interventions that will enable the development of a vibrant bond market in Bangladesh.

After the financial close of the Technaf Solar Power transaction in May 2019, this is the second deal that GuarantCo achieved in Bangladesh.

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development. www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 171 infrastructure projects to financial close which provided an estimated 223 million people with access to new or improved infrastructure. PIDG is funded by six governments (the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org

About PRAN Agro

PRAN Agro Limited, a sister concern of PRAN-RFL group registered in 1999 under the Companies Act in Bangladesh for processing agro-produce items into packed food items by increasing shelf life of the produce. It is the largest player in the local market for culinary items which producing 100s of items from spices, candies, sauces, cereal bars, mustard oil, pickles, jam-jellies, etc www.pranfoods.net

About Metlife

MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (MetLife), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help its individual and institutional customers navigate their changing world. Founded in 1868, MetLife has operations in more than 40 markets globally and holds leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. www.metlife.com
MetLife Bangladesh is the leading international life insurer in the country serving over a million customers in Bangladesh. www.metlife.com.bd

Cardano Development group company Frontclear signed a Memorandum of Understanding (MOU) with The Uganda Retirement Benefits Regulatory Authority (URBRA) to support Retirement Benefits Schemes’ participation in money and secondary bond markets. This MOU complements that signed between the Bank of Uganda (BOU) and Frontclear in 2019 and the pivotal role Retirement Benefits Schemes play in government securities markets.

The MOU has a clearly defined work programme. A key objective will be to inform the review and reform of primary and secondary legislation towards creating a more conducive legal environment allowing for Global Master Securities Lending Agreement (GMSLA) enforceability. In addition, the project will develop market principles and operational guidelines to ensure prudential participation by Retirement Benefits Schemes and establish standards of best practice to manage any risks that may arise from such transactions. Lastly, it is complemented by legal and operational training towards effective operationalization of transactions.

The URBRA carries strong ownership for the project and recognises the importance of Retirement Benefits Schemes’ participation in securities markets. Retirement Benefits Schemes hold the lion’s share of government securities, which when ‘freed-up’ in the secondary market would greatly improve overall capital market efficiency and liquidity.

“Over 70% of the retirement benefits schemes assets under management are invested in government securities, with majority held to maturity which aligns to the long-term objective and nature of retirement benefits schemes. Beyond adequate returns, diversification of investments and security of benefits, retirement benefits schemes seek greater transparency, efficiency and integrity in both the primary and secondary markets. URBRA not only aims at
promoting the development of capital markets through RBS participation in the secondary markets but also at conducting regular assessments and reviews of investment activities in tandem to market standards of best practice.” Said CEO Martin Nsubuga, URBRA

“Across many Sub-Saharan African markets, pension funds often hold to maturity and can carry up to 70%/80% of a market’s public issuances. Responsibly removing the obstacles to pension fund participation in secondary bond markets, especially repo markets, benefits the financial system as a whole.” Said CEO Philip Buyskes, Frontclear

The Currency Exchange Fund (TCX) a Cardano Development group company has launched its first-ever frontier bond currency index (TCX FI). The informative index tracks the performance of frontier currency-linked, investment-grade Eurobonds, issued by (multilateral) development finance institutions such as the African Development Bank, EBRD, FMO, and the IFC. The TCX FI currently covers 77 bonds in 20 frontier currencies where TCX has acted as hedging counterparty to the issuer. During a 3-year back-testing, the index outperformed a comparable EM-currencies portfolio in risk-return and diversification terms.

The uniqueness of the index lies in its underlying exposure. It includes frontier currencies such as the Uzbekistani Som, Honduran Lempira, Tanzanian Shilling, and Vietnamese Dong, which are not covered by existing indices. TCX calculates bond price information from the valuation of the bond’s hedges outstanding in its books.

Frontier debt is gaining traction among investors looking for alpha generation and portfolio diversification. The asset class remains underinvested due to high illiquidity, perceived risk, and accessibility concerns. TCX has been set up specifically to provide currency risk protection to hard currency borrowers in countries where the market fails to deliver solutions.

The proceeds of the Frontier currency-linked Eurobonds fund institutions whose mission is to create impact in developing countries whilst applying the highest ESG criteria in the industry. Settled in euros or dollars, the bonds provide an accessible road to frontier currency exposure with minimal credit risk and no transfer and convertibility risk. The development of the index was made possible by the German Ministry of Economic Cooperation and Development, BMZ.