Act local to plug the infrastructure funding gap in Africa and Asia.

Case study

Developing local capital markets

Before local transactions can take place, GuarantCo often lays the groundwork needed to develop local capital markets through capacity building workshops and dedicated advice to clients, regulators and issuers.

To allow domestic capital from investors, such as pension funds and insurance companies, certain regulations need to be changed to make it possible for them to become involved. By providing training to market players, including the institutional investors, they are able to better understand and assess the risks related to infrastructure assets. This helps to foster a more supportive investment climate.

As part of its market entry in Bangladesh, GuarantCo, with Private Infrastructure Development Group (PIDG) Technical Assistance funding, commissioned a study on the Bangladesh Bond Market in 2019. The findings supported stakeholders to focus on developing the local capital market through a mix of measures including policy changes, awareness generation and the introduction of financial products to mitigate potential risk for investors. Together with the Dhaka Chamber of Commerce & Industry (DCCI) GuarantCo organised a conference to discuss the report’s recommendations.

In October 2021, GuarantCo, the Ministry of Commerce and the DCCI hosted a webinar on ‘Bridging the infrastructure financing gap through credit solutions in Bangladesh’ as part of the international Bangladesh Trade & Investment Summit 2021 which was attended by Her Excellency Sheikh Hasina, Honourable Prime Minister, Government of the People’s Republic of Bangladesh.

The webinar demonstrated why long-term, local currency infrastructure financing is crucial for Bangladesh, the importance of crowding-in institutional capital and how credit enhancement programmes can be successfully implemented to help achieve infrastructural growth illustrated by GuarantCo transactions Technaf and PRAN Agro.

Focus on innovation

GuarantCo is always interested in finding a solution when a project cannot get financed. In 2019, in Togo, a country in West Africa where it had no prior business, the company identified a plan to construct a natural gas-fired thermal plant in need of liquidity support. The power plant would provide electricity to early 20% of Togo’s population.

It designed a guarantee to extend the 7-year tenor for commercial banks to 14 years to facilitate the refinancing when the tenor of the loan comes to an end. It was also GuarantCo’s first transaction to be financed mainly in local currency, which helps the power company offer a competitive electricity tariff to the local population.

Since 2005, through its guarantees, the company has enabled USD 5.8 billion in infrastructure investments through 57 transactions in 22 countries across Africa and Asia, giving 45 million people access to improved infrastructure and creating 234,000 jobs by the end of 2020.

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. GuarantCo’s portfolio and investment strategy are managed and executed by its fund manager Cardano Development via the GuarantCo Management Company.

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