The following provides a snap-shot of a few of the global Financing Intermediaries.
Investment Promotion and Financing Facility (IPFF) of Bangladesh is a publicly held vehicle in operation since 2006 that provides long term funding through eligible financial institutions, who on-lend to qualifying PPP projects on market terms. The equity contribution of the sponsor (minimum of 30%) and the debt share of the local financial institution (minimum of 20%) ensure market-based incentives in selecting only commercially viable PPP transactions, and their successful implementation.
FONADIN (National Infrastructure Fund - Mexico) was established in February 2008, under the management of the national infrastructure bank Banobras. Fonadin was created in response to the tight credit market of the financial crisis to address risks that the market was not able to handle. It began with a sum of over 40 billion pesos (US $3.3 billion) in 2008 which will build up to approximately 270 billion pesos (US $22.2 billion) in 2012 through toll-road revenues. Fonadin can offer credit guarantees to project companies seeking funding from commercial banks or financial intermediaries or for bonds issued by a concessionaire. Fonadin can cover up to 50% of the loan or issuance with its guarantee. Fondo Nacional de Infrastructura (Fonadin) of Mexico Fonadin's role is to finance infrastructure. It offers a variety of instruments including: grants, subsidies, guarantees (for stock, credit, damage and political risk), subordinated lines of credit, and grants for technical assistance.
Infrastructure Development Finance Company ("IDFC") of India was set up in 1997 by the Government of India along with various Indian banks, financial institutions and IFIs. IDFC's task is to connect projects and financial institutions to financial markets and by so doing develop and nurture the creation of a long-term debt market. It offers loans, equity/ quasi equity, advisory, asset management and syndication services
India Infrastructure Finance Company Limited (IIFCL) started operations in April 2006. IIFCL accesses capital from the Government, IFIs and the financial markets (in some cases benefitting from a Government guarantee). These funds are on-lent to PPP projects. The IIFCL does not have a sophisticated risk assessment function. It follows commercial banks, providing only part of the debt requirements of the project and therefore ensuring that the incentive to assess projects and ensure successful implementation rests squarely on the commercial equity and debt providers.
Indonesian Infrastructure Finance Facility (IIFF) is a private, non-bank financial institution, commercially oriented with private sector governance, mandated and equipped to mobilize local currency private financing. The IIFF is capitalized through equity investments and subordinated loans from the Government, the private sector and multilaterals. It will invest in PPP projects, with debt, equity and/or guarantees, and by providing advisory services. (Infrastructure Development Finance Company (IDFC))
Emerging Africa Infrastructure Fund (EAIF) is a US$600 million debt fund, which aims to address the lack of available long-term foreign currency debt finance for infrastructure projects in sub-Saharan Africa. The EAIF was created through a joint venture of development institutions and commercial banks. By mixing equity from donors, subordinated debt from development partners with senior debt from commercial lenders, EAIF seeks to reduce its cost of lending and provide mid-market debt managed by commercial lenders.
Indonesian Infrastructure Guarantee Fund (IIGF) is a company, wholly owned by the Indonesian Government, that acts as the single window for guarantees for PPP projects. It assists the MoF in its role of monitoring and allocating Government support by assessing projects and helping to source any guarantees needed for that project, for example from the World Bank, MIGA, its own capital or the Government.
Brazilian Economic Development Bank (BNDES) is a publicly owned commercial bank. Formed in 1952, BNDES raises money through the issuance of Government securities in favour of BNDES. It also has access to the capital markets and can raise money through trading securities and all manner of derivatives; it also earns income from its loan portfolio and can issue debentures. With its long term financing BNDES has been fundamental in the growth of PPP in Brazil. It is a dominant force in Brazil's infrastructure market and provides debt for most of its PPP projects. As a Government owned Bank it received funds from the Government and uses the Government's credit position to offer very low rates for long-term debt. BNDES is also subject to criticism, in particular for squeezing out private lenders due to its dominant position, for long wait times for approval of loans, being overly risk averse, and requiring security from sponsors more appropriate to corporate financing than PPP.
Development Bank of Southern Africa (DBSA) is a development finance institution wholly owned by the Government of South Africa that focuses on investments and joint ventures/partnerships in public and private sector financing. DBSA can raise money on local and international capital markets and is publicly listed on the New York Stock Exchange. Its bond ratings are the same as South African Sovereign Ratings. DBSA offers a variety of financial products, including grants, equity, debt (senior and subordinated), underwriting guarantees and other credit enhancement.
Tamil Nadu Urban Development Fund (TNUDF) was created as a trust fund with private equity participation and without state guarantees, the first such structure in India. Its paid-in capital combined with debt raised from a World Bank loan to the Government allowed TNUDF to issue the first non-guaranteed, unsecured bond issue by a financial intermediary in India, in 2000, three to four years after being established. The issue received a LAA+ rating from ICRA due to credit enhancement and structured payment mechanism, low gearing and strong repayment record. The proceeds from bonds are deposited in the fund, and subsequently lent back to the participating local bodies as sub-loans to finance their infrastructure projects.