Cordiant Emerging Loan Fund IV

CDC BACKS CORDIANT FUND TO BRING LOAN FINANCE TO BUSINESSES ACROSS AFRICA AND ASIA

US$50 million commitment from CDC will help boost availability of long-term business funding

CDC, the UK’s development finance institution, is making a US$50 million investment designed to provide much-needed loan finance to private sector projects and businesses in Africa and South Asia.

CDC is backing the Cordiant Emerging Loan Fund IV (CELF IV), managed by Cordiant Capital. The fund, which is seeking to fill the gap left by the withdrawal of western banks in emerging markets, will focus on providing debt finance to projects, companies and banks across a wide range of sectors, usually in the form of senior, secured loans.

With pressure on US and European banks to offset losses on loans stemming from the Eurozone crisis, lending activities in emerging markets have been significantly scaled back, making loans more costly and harder to come by for promising businesses in countries that are growing strongly.

CDC’s US$50 million commitment has helped Cordiant Capital raise US$250m for CELF IV. Lending done by local banks to businesses in developing countries is too frequently of shorter tenors than is often needed. CELF IV will aim to provide scarce, long-term debt funding to firms across the emerging markets, although CDC’s commitment will only target firms in Africa and South Asia that currently struggle to access such funding.

Jeremy Burke, Investment Director for CDC’s Debt and Financial Institutions team said:

“Many projects and businesses in developing countries have both the potential to grow and a strong appetite for the longer term lending that will fuel that growth. But a combination of the financial crisis in the West, tighter international capital rules and underdeveloped local capital markets means that access to debt continues to be a challenge, particularly in sub-Saharan Africa

“We’re backing the Cordiant Emerging Loan Fund IV because it’s well positioned to be able to provide long-term debt capital to markets where it’s most needed but also because of Cordiant’s commitment to sound environmental, social and governance principles. CDC expects its support of the Cordiant fund to bring in other investors to provide additional commercial capital, further strengthening the flow of funds to businesses in our markets.”

Cordiant has a strong track record in this area and has built an extensive pipeline, currently reviewing over 20 deals across a broad range of sectors, including infrastructure and manufacturing. CELF IV expects to invest amounts of between US$5 million and US$25 million in a portfolio of 30 to 50 companies. The length of these loans will be anything from one to 10 years and will often be a part of a larger financing package to a company or project.