The crisis has diminished commercial banks’ appetite for lending, which traditionally had been IFC’s primary means of mobilizing resources from third parties to serve the needs of clients in emerging markets. In response, IFC has provided a way for development finance institutions and international finance institutions to quickly scale up their investments – by allowing them to participate in syndicated parallel loans.
Under this new approach, IFC uses its existing syndication platform, as well as its deal-structuring expertise and global presence, to identify investments, perform due diligence, and negotiate loan documents, sharing those benefits with DFIs and IFIs. IFC can also act as an agent, as required, on these parallel loans. IFC’s global origination capacity and deal-structuring skills attracted DFIs to join us in our investments, helping fill some of the financing gaps caused by the retrenchment of commercial lenders. This coordinated approach allows both borrowers and DFIs/IFIs to save time and costs while also providing clients with better access to financing.
In FY09, DFIs and IFIs accounted for 17 percent of the $2.2 billion IFC mobilized through loan syndications. The first parallel loan using this new approach was for Pantaleon, a Guatemalan producer of sugar and ethanol, where $100 million in financing was provided by IFC and its four DFI/IFI partners (Proparco, DEG, FMO and IIC). IFC is one of the first multilateral development banks to adopt this new approach.
