Washington D.C., April 8, 2003— The
International Finance Corporation (IFC), the private sector arm of the
World Bank Group, announced
today that it would provide a $50 million revolving mortgage credit line
to the Baltic-American Enterprise Fund (BalAEF) aimed at boosting the Company’s
mortgage operations in Estonia, Latvia and Lithuania.
IFC also announced that it will provide up to $7.5 million
of income participating subordinated debt to Hanseatic Capital, a wholly-owned
subsidiary of BalAEF, to expand its mezzanine Mezzanine investments combine
debt financing with equity features such as conversion rights, in order
to mitigate the risk and generate income while providing for potential
equity upside. investments in growth-oriented businesses across the
region.
BalAEF was established in 1994 to contribute to the private sector development
in the Baltic States. BalAEF’s work in the region has focused on
the development and funding of primary and secondary mortgage market activities
and the provision of capital to growth-oriented companies. The Fund
has originated over 4,000 mortgage loans and has financed over 100 businesses
since inception.
IFC played a critical role in the establishment of BalAEF’s mortgage origination
activities and mezzanine finance operations into two newly-created entities,
the Baltic American Mortgage Company, and Hanseatic Capital LLC. These
two entities will significantly expand BalAEF’s ability to grow its operations
and strengthen local capital markets.
IFC will work with BalAEF to expand its mortgage lending operations and
promote new secondary mortgage market activities. IFC, with a recognized
global expertise in these areas, is considering supporting the Company’s
plans for international Mortgage Backed Securities issuance, facilitating
capital markets access for the mortgage industry.
Karl Voltaire, IFC’s Director of the Global Financial Markets department
said: “IFC’s support to BalAEF will strengthen the leading mortgage finance
institutions in the region and will serve as a market model for providing
affordable mortgage loans to families in the Baltics.”
Hanseatic Capital offers innovative financial solutions to businesses seeking
funding for expansion, capital restructuring, or changes in ownership by
providing subordinated debt and equity investments. Hanseatic Capital’s
investment size typically ranges from $0.5 million to US$2.5 million. IFC’s
participation in Hanseatic Capital has served as a catalyst for attracting
additional financing to the company.
Edward Nassim, IFC’s Director of the Central and Eastern Europe department,
noted: “Each of these two investment vehicles is the first of its kind
serving the Baltic States. The standards of operation set by BalAEF and
Hanseatic Capital will create new benchmarks and assist in the continuing
development of capital markets in the Baltic region.”
Richard Sheridan, President and CEO of BalAEF said, “We are pleased with
our new strategic partnership with IFC, supporting strong growth in our
investment initiatives.We share a common goal:
to build upon our tradition
of financial innovation in the Baltics.”
BalAEF (www.balaef.com)
was capitalized at $50 million by the US Government through the US Agency
for International Development (USAID). BalAEF is governed by an independent
Board of Directors and is run by a professional management team.
IFC’s mission (www.IFC.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people’s lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
Since its founding in 1956 through FY02, IFC has committed more than
$34 billion of its own funds and arranged $21 billion in syndications for
2,825 companies in 140 developing countries. IFC’s worldwide committed
portfolio as of FY 02 was $15.1 billion for its own account and $6.5 billion
held for participants in loan syndications.