Inter-American Investment Corporation
Basic Requirement for Funding
Companies. To obtain financing from the Inter-American Investment
Corporation (IIC), a company must be a profitable venture with growth potential
requiring medium- or long-term funding to capitalize on its market potential.
Companies must have capable management that shares the IIC’s
commitment to transparency and compliance with national accounting, tax,
and environmental standards and labor practices. The IIC’s target market
comprises companies with sales ranging from $5 million to $35 million. In
addition, the IIC works selectively with companies having sales in excess of
$35 million. Eligible companies are typically majority-owned by citizens of
any of the IIC’s 26 member countries in Latin America and the Caribbean,
although on occasion the IIC finances joint-venture companies that are not
majority-owned by citizens from the region. While profitability and long-term
financial viability are a prerequisite for consideration for IIC financing, other
IIC selection criteria relate to the company’s impact on factors that further
economic development, including job creation; generation of net foreign currency income or promotion of foreign currency savings; transfer of resources
and technology; improvement of domestic management skills; fostering of
broader public participation in company ownership; and/or promotion of the
region’s economic integration.
Financial Institutions and Equity Funds. The IIC provides funding to all types
of financial institutions that serve the small and medium-sized corporate
market. Eligible institutions include, but are not limited to, commercial
banks, leasing companies, finance companies, and specialized financial service
companies.
The IIC works with financial institutions to provide long-term loans to small
and medium-sized companies in order to expand its market penetration and
geographic coverage. The IIC selects leading financial institutions as measured
by the regulatory standards in the countries where they operate.
Financial institutions considered for IIC financing are typically in the top quartile
of the financial system in terms of asset quality, profitability, capital adequacy,
and other measures of financial soundness. The IIC also supports the
development and growth of financial institutions by offering quasi-equity
financing that qualifies as second-tier capital. While the IIC does not select
financial institutions based primarily on asset volume, size is a consideration.
In order to be considered for IIC financing, smaller institutions within a financial
system must have a clear and credible business plan for competing effectively
against larger institutions.
The IIC is an active investor in private sector, country, and regional equity funds.
Eligible investment funds must have an exclusive focus on Latin American and
Caribbean companies; a partial or exclusive focus on companies with sales of
$35 million or less; an experienced investment management team with demonstrated
track records as investors and fund managers; a well-developed investment
strategy and clearly defined investment parameters; demonstrated ability
to raise capital; and a legal structure, investment return parameters, and
expenses consistent with market practices.
How to Apply
Companies seeking medium- or long-term financing to expand their operations
should send a brief description of the firm and a business plan to the IIC
regional office for the country in which the company is located, or directly to
the IIC Corporate Finance Division Chief in Washington, D.C. If the applicant is
a financial institution seeking funds to on-lend to small and medium-sized
enterprises in the region, or seeking to establish an agency line, it should send its latest audited financial statements and a brief proposal for the use of
funds to the IIC Financial Services Division Chief in Washington, D.C.
If the project or financial institution meets the IIC’s eligibility criteria, more
detailed information will be requested. After reviewing this detailed information,
the IIC may decide to conduct an on-site project appraisal and arrange a
meeting of the project sponsors with IIC senior management. The IIC charges
a project appraisal/processing fee and other fees as applicable.
If the results of the project appraisal are satisfactory to IIC management, a
report with the proposed terms of the transaction is submitted for approval by
the IIC Board of Directors. Once the transaction is approved, the terms of the
IIC’s financing are finalized and the legal documents are drafted and signed.
Funds are disbursed in accordance with the terms of the loan and/or equity
agreement signed between the IIC and the company. The IIC requires quarterly
reports on the progress of the project and the company’s operations,
along with audited financial statements and other pertinent information. The
IIC maintains constant contact with its clients and partners to monitor its loan
and investment portfolio.
For more information, please contact:
Inter-American Investment Corporation
1350 New York Avenue, Stop B-1250
Washington, DC 20577 USA
E-mail: iicmail@iadb.org
Tel.: (202) 623-3900
www.iic.int
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