IFC Debt Mobilization: MCPP Overview by Meaghan McGrath

IFC Debt Mobilization: MCPP Overview MCPP SAFE & HKMA MCPP Infrastructure MCPP FIG/Credit Insurance Meaghan McGrath Juliette D’Hollander Steve Wagner Koro Nuri Matthew Huggins Vinita Sinha Ivan Illescas Samatar Yonis

October, 2017

Managed Co-Lending Portfolio Program (MCPP) 

The Managed Co-Lending Portfolio Program (MCPP) is an IFC Syndications product that allows institutional investors the opportunity to passively participate in IFC’s future loan portfolio.

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Investors provide capital on a portfolio basis, which can be deployed by IFC in individual investments across all regions and sectors in accordance with IFC’s strategy and processes, as well as subject to the investors’ desired eligibility criteria.

Managed Co-Lending Portfolio Program (MCPP) 

MCPP investor approval is sought pre-mandate; project appraisal, approval, commitment, and supervision are managed directly by IFC with the MCPP investor passively following IFC decisions.

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MCPP complements IFC’s existing B Loan and Parallel Loan platforms. Through MCPP IFC can expand its base of colending partners to include investors that do not have the capacity to invest on a “deal by deal” basis.

MCPP – A New Future For Debt Mobilization MCPP

MCPP Sovereign

MCPP SAFE

MCPP HKMA

MCPP Infrastructure

MCPP Allianz

MCPP Prudential

MCPP Unfunded

MCPP AXA

MCPP FIG (Credit Insurance)

MCPP – Basic Sovereign Investor Administrative Agreement Loan Agreements and Portfolio Management

Sovereign Investor

IFC Trust Fund

IFC as Implementing Entity

Borrowers

MCPP Sovereign – SAFE 

In 2013, the People's Bank of China, through SAFE, its State Administration for Foreign Exchange, pledged $3 billion under the MCPP platform to be committed over a six-year period.

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In one-and-a-half years, $1.5 billion was disbursed in 60 investments across the IFC’s portfolio in 30 different countries.

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This collaboration is particularly significant because the IFC used it as a template to launch the MCPP Infra Initiative, and was the foundation for MCPP HKMA.

MCPP Sovereign – HKMA 

In September, 2017 the Hong Kong Monetary Authority (HKMA) signed on to become a part of IFC’s MCPP program.

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MCPP HKMA follows the SAFE structure, and officially launched in October, 2017.

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HKMA has committed $1 billion.

MCPP – Basic Institutional Investor

B-Lender

Facility Participation Agreement Fund

Loan Agreements and Portfolio Management

Borrowers

MCPP Infrastructure Initiative Raise $5 Billion in 5 Years 

MCPP Infra is designed for institutional investors seeking to increase their exposure to emerging-markets infrastructure.

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It is a platform on which private institutional investors and the IFC co-invest in infrastructure loans in emerging markets.

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IFC will originate, approve, and manage the portfolio of loans that will mirror IFC’s own portfolio in infrastructure.

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This structure is unprecedented, as until now infrastructure funds involving multilaterals and private institutional investors have mostly focused on private equity-style investment.

Addressing Emerging Market Infrastructure Challenges – Private Sector Solutions 

It is estimated that $1 trillion dollars a year of financing is needed to build modern infrastructure in emerging markets.

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The bulk of this investment requires the provision of long term financing, especially loans.

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Fewer banks are willing to provide long term loans.

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Therefore, unlocking capital flows to infrastructure from new sources, in particular institutional investors, became a high priority.

MCPP Infrastructure Begins 

On October 5, 2016, Allianz and IFC signed a partnership to make Allianz our first partner in the MCPP Infra Initiative.

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Allianz will invest $500 million, to be co-invested alongside IFC debt financing for infrastructure projects in emerging markets worldwide.

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With support from Sida, IFC will provide a limited first-loss guarantee on the investments to meet the risk-reward profile that institutional investors require.

MCPP Infrastructure – Other Deals 

MCPP Infrastructure officially launched in October, 2017.

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Allianz have been fully signed: 

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Prudential has been fully signed: 

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Commitment of $500 million by Allianz

Commitment of $500 million by Eastspring Investments, the Asian asset management business of Prudential

IFC is currently finalizing negotiations with AXA: 

AXA’s commitment will be $500 million

MCPP Unfunded – FIG (Credit Insurance) 

MCPP Financial Institutions will tap $500 million apiece in unfunded credit insurance from Munich Re and Liberty Specialty Markets, part of Liberty Mutual Insurance.

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This will enable IFC to provide at least $2 billion in loans to commercial banks, offering additional capacity for onlending to small and medium enterprises, women-owned businesses, and climate change strategies.

Washington DC Key MCPP Contacts in the IFC Legal Department 

Meaghan McGrath

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Koro Nuri

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Jennifer Drogula

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Matthew Huggins

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Ivan Illescas

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Steven Wagner

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Samatar Yonis

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Juliette D’Hollander

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Ekaterine Gureshidze

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Bettina L. Muller

MCPP Regional Anchors in the IFC Legal Department 

Europe: Nino Tsiskaridze, Glen Russell, Ekaterina Kushnareva, Victoria Androsova

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Asia: Vinita Sinha, Kaizer Karachiwala

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Africa: Myles Doherty, Nicolas Busquet

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LAC: Steven Wagner, Ivan Illescas

The Future of Mobilization

A Loans

B Loans

Borrower

MCPP Loans

Multiple Investment Products in a Single Project LP LP Counter Guarantee's/MCPP (SIDA)

Financial Institution

Investment Fund

Institutional Investor #1

Institutional Investor #2 Institutional Investor #3

(FIG) Credit Insurance

HALP

A Loans

ALP

Standard B Loans (B1)

B Bonds

B Loans

Borrower

MCPP B Loans (B2)

Sovereign #1

Sovereign #2

MCPP Loans

Sovereign #3

Thank You Meaghan McGrath mmcgrath@ifc.org Chief Counsel Samatar Yonis syonis@ifc.org Legal Assistant IFC Legal Department Washington D.C.