IFC invests $45 million in Standard Chartered Bank initiative for micro-finance sector in Asia and Africa
16 May 2008
New Delhi: International Finance Corporation (IFC), a World Bank affiliate, is funding the first-ever issuance of notes backed by loans to micro finance institutions in Africa and Asia through Standard Chartered Bank.
The innovative transaction will establish a new product to provide investors with access to micro finance as an asset class, and will enable Standard Chartered to expand its lending to the micro finance sector.
As a member of the World Bank Group, IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilising private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments.
IFC aims to provide opportunities to the economically weaker segments who are not served by banks to escape poverty and improve their lives through access to business-oriented micro financing. IFC is a leading international investor in micro finance institutions, working with more than 90 institutions in 57 countries.
IFC will invest $45 million in credit-linked notes to be issued by MILAA (Micro finance Institutional Loans for Asia and Africa), a special purpose vehicle set up by Standard Chartered to facilitate micro finance lending.
The notes will be linked to a portfolio of loans that the bank has made to micro finance institutions in Sub-Saharan Africa and South Asia. They will also enable the Standard Chartered to extend additional credit to micro finance institutions that will in turn reach more 'unbanked' people.
Standard Chartered group chief executive Peter Sands said, "This transaction will unlock more funding for micro finance. We believe improving access to finance is a key lever in reducing poverty and catalysing broader social and economic development. We hope other investors will be inspired by the IFC's support of this transaction."
Lars Thunell, IFC Executive Vice President and CEO said, ''By working together on this innovative deal, IFC and Standard Chartered are helping people who do not have access to banking services. At the same time, we are building an asset class for investors who are looking for more micro finance opportunities in emerging markets.''
As part of the 2006 Clinton Global Initiative, Standard Chartered committed to establishing a $500 million micro finance facility over a five-year period, and this deal with IFC forms part of that commitment. Standard Chartered supports 48 micro finance institutions across 15 countries in Africa and Asia, estimated to impact the lives of 1.2 million people of whom a majority are said to be women.