IFC Supports Raiffeisenbank
OREANDA-NEWS. June 15, 2012. IFC, a member of the World Bank Group, is investing USD 75 million in the Diversified Payment Rights financing transaction by Russian Raiffeisenbank contributing to capital market development in Russia by reintroducing this form of long-term finance to the country for the first time since 2007, reported the press-centre of Raiffeisenbank.
In addition to IFC’s seven-year financing, WestLB is acting as another anchor investor on the transaction with a 5 year tranche. The joint lead arrangers on this transaction are WestLB and Raiffeisen Bank International.
Diversified Payment Rights financing uses foreign currency in-flows from export and other sources as collateral, enabling funding at longer tenors and cheaper rates than would be provided through unsecured loans. The IFC funding will allow Raiffeisenbank to expand finance to small and medium enterprises, and municipalities. This will help diversify Russia’s economy through private entrepreneurship and development of social and economic infrastructure, including roads, water, transportation, and healthcare facilities.
Sergei Monin, Chairman of the Board of Raiffeisenbank, said, "The establishment of the Diversified Payment Rights program is an important step towards a further diversification of funding options for Raiffeisenbank. The Diversified Payment Rights program gives the bank access to a new funding source which can be tapped even in a challenging environment. The close cooperation with IFC under this transaction continues the historically successful relationship between our institutions".
Khawaja Aftab Ahmed, IFC Financial Markets Director for Europe, Central Asia, the Middle East and North Africa, said, "In this transaction IFC plays the role of an anchor investor in the first Diversified Payment Rights financing in Russia since the 2008 financial crisis. This inaugural Diversified Payment Rights program of Raiffeisenbank is expected to mobilize up to USD 800 million from institutional and private investors over time, and would have an important demonstration effect for Russian capital markets".
This investment builds on IFC’s relationship with Raiffeisenbank, which began in 2003, and contributes to IFC’s strategy in Russia to support private sector development and encourage economic growth. The country became a member and shareholder of IFC in 1993. Since then, IFC has invested nearly USD 6 billion in Russia, including USD 1.5 billion in syndicated loans, and is involved in 250 projects across a variety of sectors. IFC’s investment portfolio in Russia stands at USD 2.54 billion, the third-largest country exposure for IFC globally.