Managed Co-Lending Portfolio Program (MCPP)
The Managed Co-Lending Portfolio Program is IFC’s groundbreaking Syndications platform that creates diversified portfolios of emerging market private sector loans, allowing investors to increase exposure—or get first-time entry—to this asset class.
The MCPP platform leverages IFC’s origination capacity and deep market knowledge to source opportunities for third-party investors to co-lend alongside IFC on commercial terms. The MCPP gives IFC the ability to provide larger financing packages than we could provide from our own account and increases the pool of financing available for achieving development goals.
As of 2018, the MCPP has raised $7 billion from eight global investors.
How does MCPP work?
The MCPP builds a loan portfolio for an investor that mirrors the portfolio IFC is creating for its own account—similar to an index fund. MCPP investors and IFC sign upfront administration agreements determining the makeup of the portfolio based on agreed eligibility. Investors pledge capital upfront and then as IFC identifies eligible deals, investor exposure is allocated alongside IFC’s own per the terms of the agreement.
Depending on the type of investor, the program can offer a variety of structures:
- IFC can set up a dedicated Trust Fund to hold investors' funds. IFC signs borrowers' loan agreements for its own account and as “implementer” on behalf of the investor(s) for the trust fund.
- Investors can establish an investment vehicle and contract with IFC to originate transactions. IFC lends for its own account; investors participate through B Loans.
- Unfunded structures can be used to provide IFC with credit insurance or risk guarantees. IFC lends for own account, with insurers’ credit coverage on a portion.
Project appraisal, approval, commitment, and supervision are delegated to IFC. IFC’s knowledge of local clients and market conditions, coupled with its project origination capacity and proven track record, help overcome investors’ challenges of sourcing viable investment opportunities in developing countries. The fact that IFC maintains a share of each investment for its own account ensures that its decisions align with the interests of investors. Together, these aspects of the MCPP structure have contributed to its success.
Learn more about how the MCPP mobilizes financing for development by clicking here.
The People's Bank of China, through SAFE, its State Administration for Foreign Exchange, became the first partner in the MCPP in 2013. SAFE is a long-standing partner of IFC, and the PBOC pledged $3 billion under the MCPP platform to be committed over a six-year period.
Over the past five years, IFC has welcomed several more partners to the MCPP:
- Allianz Global Investors (2016)
- AXA (2018)
- Eastspring Investments (2017)
- Hong Kong Monetary Authority (2017)
- Liberty Specialty Markets (2017)
- Munich Re (2017)
- Swiss Re (2018)
MCPP Trust Funds
MCPP provides investors a platform for participation in a diversified global portfolio of emerging market projects across multiple sectors. All investments are commercially structured and designed to address development needs.
SAFE and the Hong Kong Monetary Authority participate in the MCPP through an IFC Trust Fund structure, which provides an efficient way for sovereign investors to make one large allocation of capital, and then delegate authority to IFC to create over time a diversified pool of loans on their behalf. Both SAFE and HKMA invest alongside IFC in senior loans to support economic development across all industry sectors – covering infrastructure, financial institutions and the real economy.
MCPP is significantly scaling up IFC’s debt mobilization from institutional investors. Of the total raised to date for MCPP, $2 billion has been targeted exclusively toward emerging market infrastructure investments through MCPP Infrastructure.
Unlocking capital flows from new sources, in particular institutional investors, has become a priority for IFC to fill the dramatic financing gap for emerging market infrastructure. The MCPP Infrastructure facility offers one solution to channel more funding into emerging-market infrastructure while demonstrating a path for other investors to follow.
Learn more about how MCPP Infrastructure works by clicking here.
MCPP Financial Institutions
Credit Mobilization is IFC’s innovative credit insurance solution to expand the pool of long-term funding available for emerging-market firms. It allows these companies to take what are, in many cases, their first insurance exposures to these markets and counterparties.
The first successful application of Credit Mobilization initiative through the MCPP is the MCPP Financial Institutions facility, which began operations in 2017. MCPP Financial Institutions involves a partnership with two insurance companies, Liberty Specialty Markets and Munich Re, to bring in $1 billion of unfunded credit risk exposure that will support $2 billion of IFC senior loans to developing country banks.
Learn more about how Credit Mobilization and MCPP FIG work by clicking here.