IIB Development Group (IIB-DG) is the funding arm of the world. We are the biggest multinational financial institution in the world. We provide long-term infrastructural funding for international projects: off-balance sheet finance, Long-term loan, and non-recourse funds for the development of large commercial, industrial, utility, and infrastructure projects secured by the assets and operations of the project. We provide industrial projects and public-private partnerships using non-recourse funds.
We aim to foster better, more efficient services and deliver exceptional service to our clients no matter the distance barrier.
All projects financed by IIB-DG must adhere to stringent IIB-DG vision, mission, standards, and our Sustainability Framework. which help our clients sustainably do business.
Under our funding program, IIB issues bonds or any other financial instruments in a variety of markets, formats, and currencies—including global benchmark bonds, green and social bonds, private placements, and discount notes. Local-currency bonds to develop domestic capital markets and facilitate local-currency lending.
Besides raising capital through financial instruments, and bond issuance, we invest our liquid assets globally and manage them versus recognized industry benchmarks. We aim to outperform those targets while preserving capital and ensuring funds are available as needed for our private sector investments in developing countries.
We also manage currency and interest rate risks of assets and liabilities on IIB-DG’s funded balance sheet within prudent risk limits. This allows us to tailor risk management and loan products to the needs of IIB-DG’s clients while hedging the resulting market risks.
What we provide
1. Products and services
IIB Development Group (IIB-DG) offers a range of products and services
IIB works in every major area of development. We provide a wide array of financial products and technical assistance, and we help countries and businesses share and apply innovative knowledge and solutions to the challenges they face.
The IIB-DG offers financial products tailored to each client. Prospective clients have to demonstrate that their proposed project or business meets the minimum requirements to be eligible to be considered for IIB-DG involvement.
IIB-DG financing for public and private sector projects generally ranges from $100 million to billion in the form of a line of credit, funding, or equity. The average IIB-DG investment is $500 million.
The forms of direct financing we offer are:
- Equity Investments
IIB-DG funds for the public or private sector projects usually start from a minimum of €100 million to €Billion. The average amount is €500 million.
The IIB-DG’s funds are flexible to provide loan profiles that are suitable for each client’s and project’s needs. This helps determine each loan currency and interest rate formula.
Loans are based on the project’s expected cash flow as well as the client’s ability to repay the loan on the agreed payment period. The credit risk can be taken entirely by the IIB-DG. The funds may be secured through the borrower’s assets and may also be equity-linked or convered into shares. Full details are negotiated with the client on a case-by-case basis.
Lines Of Credit
IIB-DG, therefore, provides Lines of credit to national and regional institutions, microfinance institutions, and local banks to enhance its support to SMEs and new projects.
- Usually range between €100 up to €100 Billion or more
- Fixed or floating rate, the rate between 1% to 1.5%
- Senior, subordinated, mezzanine, or convertible debt.
- Denominated in major foreign or local currencies.
- Short to long-term maturities up to 25 years
- Project-specific grace periods may be incorporated, 5 Year Grace Period
An initial Grace Period of Five (5) years from the Date of Term Sheet Signature and after the agreed Grace Period, the client shall be granted a further 15-25 years to repay, at which time a fixed interest rate of 1% -1.5% percent per annum shall be charged on the outstanding Balance only.
IIB-DG funds are based on current market rates and are priced competitively. Following a successful inquiry and once a project has been presented to the IIB-DG, financial terms can be discussed in detail with IIB-DG Financial staff.
As the type rate directly affects profitability, a project’s financial structure may include both floating and fixed-rate funds. The mix is evaluated concerning client and project sensitivities to interest rate movements.
Fees and charges ( No upfront fees, no hidden charges)
A margin is added on to the base rate. The margin is a combination of country risk and project-specific risk. The IIB-DG does not charge any upfront fees.
Other funding terms
Full funding terms are negotiated with the client for each project.
Secured by collateral, client is not being personally liable for further compensation if the debt is not repaid.
IIB-DG requires project companies to obtain insurance against normally insurable risks. Examples include theft of assets, outbreak of fire, specific construction risks. The IIB-DG does not require insurance against political risk or non-convertibility of the local currency.
The IIB-DG usually requires the companies; it finances to secure the loan with project assets. These can include:
- Mortgage on fixed assets, such as land, plant and other buildings.
- Mortgage on movable assets, such as equipment, other business assets.
- Assignment of the company’s hard currency and domestic currency earnings.
- Pledge of the sponsor’s shares in the company.
- Pledge over the company’s bank accounts.
- Assignment of the company’s insurance policy and other contractual benefits
- Security in the form of pledges, mortgages, etc.
Funds provided must be used in strict accordance with the aims stated in the original business plan.
Typical project finance covenants are required as part of the loan package. Such covenants, limiting indebtedness and specifying certain financial ratios and various other issues will be negotiated.
Repayment is normally in semi-annual instalments. Longer maturities may be considered on an exceptional basis, for example, up to 30 years for large infrastructure operations.
IIB-DG can help manage financial risks associated with a project’s assets and liabilities. This covers foreign exchange risk, interest rate risk and commodity price risk. Risk hedging instruments include currency swaps, interest rate swaps, caps, collars and options and commodity swaps.
2.1What we do in equity
IIB-DG is an equity Investor, with equity stakes between 30% to 70% in the SPV and investing between 100% of required funding. The flexibility to invest in a wide range of instruments and a focus on impact investing, we provide growth capital, IPO, and pre-IPO financing. We also join in co-investments with private equity and strategic investors in a change of control situations.
Alongside financial returns, we create positive, measurable, social, economic, and environmental impacts in the countries where we work.
We are one of the largest and longest-standing equity investors in the countries where we work, looking to invest up to a billion annually through straight equity, mezzanine products, preference shares, and other instruments.
We provide equity financing primarily by investing or co-investing, along with funds focused on infrastructure, the environment, or small- and medium-sized enterprises and mid-size corporations. In some cases, IIB-DG also provides direct quasi-equity financing to support innovative companies in seek of financing to grow.
Private and listed investments
Along with private equity, we also invest in public equities to promote the capital market development in our regions by participating in pre-IPO financing, IPOs, capital increases, and other public transactions
We have a wide mandate that allows us to invest not just in growth capital opportunities but also in investments with longer investment horizons, privatizations, and others.
patient investors with longer investment horizons than typical private equity holding periods.
Comprehensive sector coverage
We have extensive experience in equity and debt investments in the following sectors, a wide network of internal and external sector specialists, an unmatched presence on the ground through our subsidiaries, and a successful history of co-investments with strategic and financial investors from our regions and beyond.
Equity, Venture Capital and Quasi-Equity
Socially and economically important projects may lack the scale or capacity required to qualify for commercial finance. They may also be nascent projects or technologies which are yet to mature within the markets and cannot, therefore, pass the “proof of concept” tests required to qualify for debt finance.
Further, a large number of enterprises require equity or venture capital rather than debt funds due to undercapitalization and lack of appropriately priced resources. Given the significant demand from such companies and the specialized nature of the support required to enable such businesses to become viable, IIB-DG will render support through carefully selected equity and venture funds.
IIB-DG invests directly into larger enterprises with significant social and economic impact subject to a clearly defined investment period exit mechanism.
1.2.Operations and processes 1.2.2.Evaluating the IIB-DG’s work
The Independent Evaluation Department evaluates the performance of the IIB-DG’s completed projects and programs relative to objectives. It systematically analyses the results of projects and wider themes defined in the IIB-DG policies.
The core objective of the evaluation is to contribute to the IIB-DG’s legitimacy and relevance and to superior institutional performance. To achieve its core objective, the Evaluation Department fulfills two primary functions:
- It provides a critical instrument of accountability through objective, evidence-based performance assessment of outputs and outcomes relative to targets; and
- It contributes to institutional learning for future operations by presenting operationally useful findings.
1.2.3 Report on the IIB-DG’s evaluation system
The IIB Development Group engages an independent external report on its evaluation system. The study aims to assess whether the IIB-DG’s evaluation system reflects best practice is meeting the needs of the IIB-DG and is contributing to improving IIB-DG performance, learning and accountability. The study has made some important recommendations.