AT A GLANCE IFC—the International Finance Corporation—fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments.
IFC is a member of the World Bank Group and is headquartered in Washington, D.C. It shares the primary objective of all Bank Group institutions: to improve the quality of the lives of people in its developing member countries.
Established in 1956, IFC is the largest multilateral source of loan and equity financing for private sector projects in the developing world. It promotes sustainable development primarily by:
Financing private sector projects.
Helping private companies in the emerging markets mobilize financing in international financial markets.
Providing advisory and risk mitigation services to businesses and governments.
IFC has an especially strong capacity to promote economic development by encouraging the growth of productive enterprise and efficient capital markets in its member countries. In this context, its advisory work with governments helps create conditions that stimulate the flow of both domestic and foreign private savings and investment.
IFC participates in an investment only when it can make a contribution that complements the role of market operators. Hence it plays a catalytic role, stimulating and mobilizing private funding by demonstrating that investments can be profitable even in challenging environments. IFC operates on commercial terms, taking the same risks as other investors. IFC has made a profit every year since its inception.
Investment Operations for Fiscal 2007
In FY07, new investment commitments for IFC’s own account amounted to $8.2 billion in 299 projects, of which $5.6 billion were for loans, $1.59 billion for equity, and $318 million for guarantees and risk management products. IFC also mobilized $3.9 billion through syndications, structured finance, and parallel loans. IFC spent $197 million on advisory services for clients in developing countries. The share of its investments in IDA countries was 37 percent.
IFC's investment portfolio as of June 30, 2007, included $25.4 billion in investments for IFC's own account and $5.5 billion in syndicated loans held for others.
Project Finance
IFC offers an array of financial products and services to its client companies: Long-term loans in many currencies, at fixed or variable rates
Equity investments
Quasi-equity instruments (subordinated loans, preferred stock, income notes)
Structured finance, including guarantees and securitizations
Risk management tools
To be eligible for IFC financing, projects must have the prospect of being profitable for investors, benefit the economy of the host country, and comply with stringent social and environmental guidelines. IFC finances projects in a wide range of commercial sectors, for example infrastructure, financial services, manufacturing, and private health care and education. To ensure the participation of investors and lenders from the private sector, IFC limits the total amount of debt and equity financing it will provide for any single project to 25 percent of total estimated project costs; it will not normally hold more than a 35 percent stake or be the largest shareholder. IFC investments typically range from $1 million to $100 million.
Mobilization
With its record of success and special standing as a multilateral institution, IFC can act as a catalyst for private investment. Its participation in a project enhances investor confidence and attracts other lenders and shareholders. IFC mobilizes financing directly for companies in developing countries by syndicating loans with international commercial banks. IFC also offers partial credit guarantees of debt instruments and other structured finance solutions to clients, helping them diversify their funding sources, extend maturities, and obtain financing in their currency of choice.
Advisory Services
IFC advises businesses and governments in developing countries on a variety of private sector matters, including regulatory reforms; business restructurings; privatizations of state-owned enterprises; business plan formulation; identification of markets, products, technologies, and financial and technical partners; and mobilization of project finance. It can provide advisory services in the context of an investment, or independently for a fee, in line with market practice. With a growing field presence and strong donor support, IFC places an emphasis on services that strengthen small and medium enterprises. Working with governments, IFC advises on improving the environment for private investment, developing domestic capital markets, and attracting foreign direct investment.
Funding of IFC’s Activities
IFC’s equity and quasi-equity investments are funded from its net worth—the total of paid-in capital and retained earnings. To fund lending operations, IFC carries out public bond issues or private placements in international financial markets. IFC’s bond issues have been given triple-A ratings by Moody’s and Standard & Poor’s.
For more information on IFC, visit: http://www.ifc.org Updated April 2008 Media Contact:
Corrie Shanahan (202) 473-2258. E-mail: cshanahan@ifc.org |
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