Swedish International Development Cooperation Agency provides GuarantCo with a USD 100 million, 20-year re-guarantee facility to alleviate poverty across Africa and Asia
Swedish International Development Cooperation Agency (Sida) has provided GuarantCo, the guarantee arm of the Private Infrastructure Development Group (PIDG), with a USD 100 million (in Swedish Krona equivalent) 20-year re-guarantee facility to increase GuarantCo’s capacity to facilitate infrastructure financing solutions and further build local capital markets to the benefit of companies and people in lower income countries across Africa and Asia.
This innovative facility is the first of its kind to be offered by Sida. Taking inspiration from Sida’s previous experience in catalytic solutions and the private credit insurance markets, the facility has been structured to provide capacity to grow GuarantCo’s portfolio through Sida risk sharing in defined portions of transactions originated by GuarantCo. This will allow GuarantCo to undertake larger transactions while continuing to manage risk within single obligor, country and sectoral limits, enabling GuarantCo to deliver enhanced impact and local currency capacity in its target geographies and sectors.
The facility will also deliver additionality by allowing GuarantCo to originate transactions of sufficient size to allow wider syndication including to the private credit insurance market, thereby mobilising an additional source of private sector support into underlying transactions. The track record built with the international insurance market through these transactions is aiming to provide a long-term demonstration impact and encourage insurers to extend their risk appetite.
The re-guarantee facility will allow GuarantCo to enhance the sustainable development impact that it delivers and help achieve the company’s vision to become a centre of excellence for local currency credit solutions for infrastructure finance in lower income countries thereby assisting with the alleviation of poverty.
Since 2005, GuarantCo has made a significant difference to people’s lives including mobilising total investment of USD 6 billion and USD 5 billion of private sector investment, providing 43 million people with improved access to infrastructure and generating 327,000 jobs in Africa and Asia.*
GuarantCo 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.
True Schedvin, Head of Unit Global Sustainable Economic Development at Sida, said: “With this guarantee, Sida contributes to boosting GuarantCo’s investment capacity in crucial infrastructure in countries with limited economic resources. Green and sustainable infrastructure that is accessible for all is necessary to give people the opportunity to create better living conditions for themselves as individuals and economic actors. Sida expects this partnership with GuarantCo to give a strong contribution to Sida’s mission to reduce poverty globally.”
Layth Al-Falaki, Chief Executive Officer of GuarantCo, said: “We are delighted that Sida has provided us with a USD 100 million re-guarantee facility to support GuarantCo and PIDG in delivering its strategic and developmental objectives to the benefit of local people in lower income countries across Africa and Asia. The facility provides essential support, allowing us to increase our capacity and facilitating local capital market development and poverty alleviation in lower income countries. It also demonstrates an efficient model for partnership with GuarantCo for other stakeholders who wish to leverage on our expertise in credit guarantees in lower income countries.”
Philippe Valahu, Chief Executive Officer of PIDG, said: “We welcome this support from Sida, and this latest innovation allows us to build on our partnership to continue to deliver vital infrastructure in the countries where it is needed the most.”