GuarantCo

GuarantCo

Providing local currency guarantees for infrastructure financing in Africa and south and south-east Asia and dollar-denominated guarantees in Fragile and Conflict-Affected States.

At a glance

Established2006
PIDG members currently fundingUK aid, Sida, SECO through the PIDG Trust, DGIS through FMO, and DFAT
Cumulative PIDG member funding$309.6m
Fund capacityCapacity of over $1bn
ChairAndrew Bainbridge
Managed byGuarantCo Management Company Ltd
Total commitments as at 31 Dec 2017$886.1m to 45 projects for which GuarantCo has signed a Recourse Agreement and/or have reached financial close
2017 commitments$245.1m to 7 projects for which GuarantCo has signed a Recourse Agreement and/or reached financial close

Expected development impact

2017Cumulative
Financially-closed projects745
Total Investment Commitments (TICs) ($m)760.05,225.3
Private Sector Investment commitments ($m)640.64,375.0
% of TICs in DAC I/II/III*93.9%
% of TICs in FCAS40.3%
Access (in millions)*2.339.5
Job creation: short-term3,58410,449
Job creation: long-term9,366221,421
Fiscal benefits ($m)15.61,690.1

Notes

* All GuarantCo projects have been made in DAC I/II/III except for 3 projects in South Africa and 1 project in Gabon, where the donors gave specific permission

Projects that reached financial close in 2017

BangladeshTechnaf Solar Energy
GabonGabon Special Economic Zone
GhanaEarly Power 2
IndiaAu Financiers 2
MaliAkuo Kita Solar
Multiple countriesAfrican Guarantee Fund
India and PhilippinesSindicatum Renewable Energy

Projects that became operational in 2017

IndiaAU Financiers
PakistanByCo Oil

Achievements in 2017

GuarantCo committed to seven guarantees, with a total exposure of $245m.

GuarantCo backed a $40m local currency green corporate bond, helping Sindicatum to secure financing for renewable infrastructure in India. Its support helped extend the tenor of the bond to seven years, moving the market beyond its previous benchmark of five years for the first time.
In Bangladesh, GuarantCo has supported a 25MW solar farm, the country’s first utility-scale solar project.

In Gabon, GuarantCo guaranteed the country’s first local currency infrastructure bond – its 10 year tenor has set a new benchmark for the market. The issuer is overseeing the development of one of the country’s special economic zones. The proceeds of the bond will help fund open rail infrastructure to support the movement of goods from nearby landlocked countries.


Other notable highlights

The GuarantCo-backed InfraCredit became operational and issued its first guarantee supporting a corporate bond which will finance new power infrastructure in Nigeria. The 10 year tenor was another new benchmark for the local market and the bond attracted investment from local pension and insurance funds for the first time.

GuarantCo was pleased to receive additional funding from the governments of Switzerland and Australia, which will further underpin its work across Africa and Asia.

In October, GuarantCo and InfraCo Africa marked the opening of PIDG’s east and southern Africa office in Nairobi, providing an important regional presence to better support local clients and achieve greater development impact.


2018 and beyond

In the coming year, GuarantCo aims to crowd in the commercial insurance market, increasing its guarantee capacity.

Following InfraCredit’s early success in Nigeria, similar initiatives are being considered in other countries. In Pakistan, GuarantCo and TAF, with support from UK aid, will support the establishment of a similar facility following a positive feasibility study. The Swedish government is supporting a similar study for Kenya.

GuarantCo will also build on its partnership with the London Stock Exchange which aims to support the listing of local currency infrastructure bonds on the London market to encourage global investment.

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