GuarantCo

Transaction Portfolio

Table of Contents
Africa
Celtel Kenya
ALAF Ltd
Mabati Rolling Mills
Celtel Chad
Home Finance Guarantors Africa
SA Taxi Finance I
Spencon
Tower Aluminium Group Ltd
Kalangala Infrastructure Services
Kalangala Renewables
Cameroon Telecommunications Ltd
Kaluworks Ltd
Quantum Terminals Ltd
SA Taxi Finance II

Asia
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Shriram I
Wataniya Palestine
Calcom Cement
Ackruti City Limited/ Hubtown
Shriram II
Kumar Urban Development Ltd
Au Financiers Ltd
Pakistan Mobile Communications Limited
Softlogic Finance
Thai Biogas Energy Company

19
20
21
22
23
24
25
26
27
28

GuarantCo in Africa

CELTEL KENYA
KES 725 million partial credit guarantee to credit enhance a
local bond issue as part of a larger financing package for the
second mobile telecommunications provider in Kenya.
Transaction Overview
Date: December 2005

Developmental Benefit

Country: Kenya

GuarantCo Guaranteed Amount: Kenya Shillings (KES) 725 million (USD 12 million)
Total Transaction size: KES 3.5 billion
Financing Partners: FMO, DEG
GuarantCo Additionality:

As part of its initiative to maximise local currency financing, Celtel Kenya sought to raise Kenyan Shilling
debt from the local capital market. However, in order to place debt in the local capital market, Celtel Kenya
needed to obtain credit enhancement from an AAA-rated institution. GuarantCos involvement enabled
FMO to arrange and underwrite the required credit enhancement for the debt issuance.
The facility provided a major boost to the Kenyan capital market due to the demonstration effect of a
private sector non-financial institutions successful bond listing.

Celtel Kenya needed to restructure its

balance sheet by exchanging costly
foreign currency shareholder loans with
local currency debt. This allowed the
company to run a more capital-efficient
and competitive business and expand its
network. This helped to reduce tariffs,
thus making mobile services affordable to
a greater proportion of the population.

ALAF LIMITED
TZS 6.5 billion partial credit guarantee made available to
provide credit enhancement for a bond issue to finance the
expansion of a steel plant in Tanzania

Transaction Overview
Date: June 2007

Developmental Benefit

Country: Tanzania

GuarantCo Guaranteed Amount: Tanzania Shillings (TZS) 6.5 billion (USD 5.1 million)

Total Project Cost: TZS 37.3 billion

Financing Partner: IFC
GuarantCo Additionality:
The Safal Group proposed to partly fund its proposed new product line in Tanzania by local currency
bonds, but needed credit enhancement to be able to access the local capital market. GuarantCo and IFCs
guarantee, covering 75% of the bond amount, was critical for Safal to begin the process of issuing the
bonds.
The guarantee was agreed by IFC and GuarantCo in 2007 but was not in the end required as Alaf
eventually managed to access the bond market without credit enhancement in 2009. However, the
availability of the guarantee played an important role in catalysing the investment 2 years earlier than
would have otherwise been possible as Safal was prepared to inject its equity portion up front knowing the
debt portion was secure. It is a feature of GuarantCos support that no early penalties are charged for
cancellation, thus encouraging clients to graduate to purely commercial finance at the earliest opportunity.

The Safal group is one of the biggest

producers of steel roofing in Africa, widely
used in affordable housing. The proposed
investment in their Tanzanian plant
introduced new and more affordable
product lines, besides improving quality of
existing production, thus providing access
to better quality housing products to low
and middle income households.

MABATI ROLLING MILLS

KES 750 million partial credit guarantee made available to
provide credit enhancement for a bond issue to finance the
expansion of a steel plant in Kenya

Transaction Overview
Date: June 2007

Developmental Benefit

Country: Kenya

GuarantCo Guaranteed Amount: Kenyan Shillings (KES) 750 million (USD 9.7 million)

Total Project Cost: KES 3 billion

Financing Partners: IFC
GuarantCo Additionality:
The Safal Group proposed to partly fund its proposed plant capacity expansion in Kenya by local currency
bonds, but needed credit enhancement to be able to access the local capital market. GuarantCo and IFCs
guarantee, covering 75% of the bond amount, was critical for Safal to begin the process of issuing the
bonds.
The availability of the guarantee in 2007, while not eventually required, played an important role in
catalysing the investment 18 months earlier than would have otherwise been possible. Safals access to
Kenyas domestic capital market without a guarantee, a significant and welcome sign of increased market
sophistication, was facilitated by GuarantCo and IFCs timely support. GuarantCo was then able to recycle
its capacity for other projects in the region.

The Safal group is one of the biggest

producers of steel roofing in Africa, widely
used in affordable housing. MRM is their
flagship operation in E Africa. Demand for
steel roofing has been growing, in line
with the rapid growth in housing activity in
the region. The new capacity at Safals
Kenya plant will enable them to meet the
growing
demand
while
continually
improving product quality.

CELTEL CHAD
XAF 3.5 billion partial credit guarantee for Afriland Bank to
provide additional lending to the leading mobile
telecommunications provider in Chad

Transaction Overview
Date: October 2007

Developmental Benefit

Country: Chad

GuarantCo Guaranteed Amount: CFA Franc (XAF) 3.5 billion (USD 8 million)
Total Transaction size: XAF 14.8 billion
Beneficiaries & Financing Partners: Afriland First Bank, FMO
GuarantCo Additionality:
In line with Celtel policy to increase local currency financing, Celtel Chad sought additional CFA financing
for capital expenditure and to refinance USD shareholder loans. The joint guarantee by FMO and
GuarantCo enabled Afriland First Bank to increase its loan beyond its normal lending cap to meet Celtel
Chads full debt requirements.

The link between mobile phone use and

development
has
been
widely
documented, particularly in Africa. The
further network expansion, partially
financed by the GuarantCo covered loan,
has helped expand the network into more
rural areas. Celtel Chad leads the way in
expanding the mobile network, so for
many areas this will be the first time they
have had access to a mobile services. In
addition, the ability to roam over a larger
proportion of the country is particularly
useful for Chad as it has a significant
nomadic population.

HOME FINANCE GUARANTORS AFRICA

USD 5 million Stop-Loss Insurance for HFGA, who will reinsure
Collateral Replacement Indemnities that facilitate access to home
loans by low and lower middle income households
Transaction Overview
Date: September 2010

Country: Ghana, Kenya, Rwanda, Uganda and Malawi

GuarantCo Guaranteed Amount: USD 5 million equivalent in local currencies

Total Project Cost : N/A
Beneficiaries & Financing Partners: HFGA, Home Loan Guarantee Company (HLGC), various local
insurance companies

GuarantCo Additionality:
HFGA is introducing innovative home loan protection products to new markets in conjunction with local
insurance companies in order to stimulate local banks to widen access to finance. HLGC, who has set up
HFGA based on their successful South African model, is a not for profit social enterprise and has not
accumulated sufficient reserves to fully capitalise HFGA. HFGA therefore faced difficulty meeting regulators
minimum capital requirements without backing from GuarantCo. Given the pioneering nature of HFGAs
work, such backing is not available from either commercial insurers or even dfis. The initial USD 5m facility
may be increased depending on demand.
Additional technical assistance funds are being used for a capacity building programme with local insurers
and banks and to help provide financial literacy training for borrowers. An output based aid programme is
also being considered that will provide targeted subsidies to make Collateral Replacement Indemnities
affordable to the lowest income quartile of households.

Developmental Benefit
Access to affordable home loans is a
major
obstacle
to
economic
development for most low and lower
middle income families in developing
countries. Many families are unable to
buy or improve a home because of
limited access to finance. There is
lender reluctance to enter this market
due to the inability of borrowers to
provide sufficient down-payments and
resulting perceived default risk.
At the same time, few developers
choose to build low cost housing
because there is no prospect of
potential buyers raising finance.

HLGCs business model has worked

well in South Africa for 20 years and
HFGA, with GCos help, aims to
replicate this success in sub Saharan
Africa.

SA TAXI FINANCE I
ZAR 139 million partial credit guarantee of the senior tranche
of SA Taxi Finances loan program

Transaction Overview
Date: September 2010

Country: South Africa

Developmental Benefit

GuarantCo Guaranteed Amount: ZAR 139 million (USD 20 million)

Total Transaction Size: ZAR 760 million
Beneficiaries & Financing Partners: FMO, Investec, ICF Debt Pool
GuarantCo Additionality:
SA Taxi were seeking to syndicate a ZAR 1,700m senior tranche out of a total ZAR 1,925m loan program.
A reduced risk appetite in the international and local market meant that an initial ZAR 635m was placed
with the DFI community. The financing was arranged by FMO and Transcapital, with participations from
GuarantCo and ICF. Investec Bank participated with a further ZAR 120m of mezzanine financing.

South Africa, being an upper middle income country, would not normally qualify for support from
GuarantCo. However, given the pro-poor nature of the financing and SA Taxis inability to access the local
markets following the financial crisis, GuarantCo obtained special approval from its shareholders to
support the financing.

The South African taxi (minibus) industry

employs an estimated 150,000 taxis and
many more individuals, directly and
indirectly. The industry is a critical part of
the countrys transportation network,
especially in the disadvantaged suburban
areas. 78% of all non private journeys in
S Africa are made in minibus taxis.
SA Taxi Group, the leader in taxi finance,
has provided seed capital to at least
19,500 broad based black SMMEs (all of
whom are previously disadvantaged
individuals).
SA Taxi is also critical to the
governments Recap program that aims
to improve the operations and regulation
of the previously chaotic and at-times
violent minibus taxi industry. The Recap
program will also result in improved
emission norms and passenger safety
standards.

SPENCON
USD 15 million performance bond guarantee facility for a local east
African construction company

Transaction Overview
Date: October 2010

Country: Uganda, Kenya, Tanzania

GuarantCo Guaranteed Amount: USD 15 million equivalent in local currencies

Total Transaction size : USD 30 million equivalent in local currencies

Beneficiaries & Financing Partners: Standard Chartered Bank
GuarantCo Additionality:
Spencon is a mid sized local civil works contractor headquartered in Nairobi specialising in the water,
roads and power sectors. They were having trouble obtaining additional performance bond lines from
their banks in order to bid for and execute projects in East Africa. Standard Chartered, their main
banker, was unable to provide the full requirement of USD 30 million, largely due to bank regulations on
single obligor limits. GuarantCos guarantee made it possible for Standard Chartered to offer the full
additional facility required.

10

Developmental Benefit
Performance Bonds are a prerequisite for
carrying out any construction project in Africa
and they are the most significant financial
bottleneck for the company. Large construction
contracts, often donor funded, are regularly
awarded
to
international
construction
companies, at 15 25% higher prices, because
local companies cannot furnish the full
performance bonds required.
GuarantCos facility will help lower the cost of
infrastructure in the target countries by enabling
greater competition and local private sector
participation. There will be continued expansion
and employment for over 800 permanent
Spencon staff and over 3,700 semi skilled
personnel across East Africa.

TOWER ALUMINIUM GROUP LIMITED

Partial credit guarantees totalling NGN 2.21 billion to credit
enhance the maiden bond issue of the largest manufacturer of
aluminium roofing in West Africa
Transaction Overview
Date: September 2011

Country: Nigeria

GuarantCo Guaranteed Amount: NGN 2.21 Billion (USD 14.7 million equivalent)
Total bond issue : NGN 4.63 Billion (Tranche A: NGN 3.63 Billion and Tranche B: NGN 1 Billion)
Beneficiaries & Financing Partners: First Trustees Limited (on behalf of investors)
GuarantCo Additionality:
In 2008 Tower Aluminium Group Limited (Tower), the largest manufacturer of aluminium roofing in West
Africa, financed a new factory with USD denominated bank loans. In late 2008, as the full impact of the
global financial crisis hit Nigeria, the Naira devalued by c 25% against the USD. Towers revenues are
mostly in Naira and the impact of the devaluation was to significantly increase the cost of servicing its USD
financial liabilities. The viability of the expanded business was thus impacted severely.
Tower recognised the need to diversify away from relying on the bank market and decided to refinance its
USD liabilities by issuing a 7 year Naira denominated corporate bond, thus enabling the company to also
reduce its currency risk and extend the tenor of its debt. Tower was however unable to secure the A local
rating required to be able to access local pension funds, key investors in the Nigerian corporate bond
market. GuarantCo was able to use its local AAA rating in Nigeria to credit enhance Towers bond issue,
thereby making it eligible for pension fund investors. This was the first time such a structure had been
used in Nigeria and there were many regulatory and procedural challenges which could not have been
overcome without GuarantCos patient developmental approach.

11

Developmental Benefit
GuarantCos support for Tower has had a
strong demonstration effect, helping build
further capacity in the embryonic Nigerian
capital markets. It has also stretched the
tenor to 7 years from the typical 5 years for
previous corporate bonds, which is a crucial
step toward meeting the requirements of
future infrastructure related bond issues
where longer tenor is essential.

Following a request for assistance,

GuarantCo is also working with the Nigerian
Securities & Exchange Commission to set
up training and mentoring of their staff.
Tower produces aluminium roofing, a
component of low cost housing. It offers
advantages over steel roofing, lasting 5
times longer, at prices affordable to low
income families in Nigeria and other parts of
West Africa

KALANGALA INFRASTRUCTURE SERVICES

Joint partial credit guarantee totalling USD 2.2 million covering
part of the financing for two new ferries, a road rehabilitation and
certain water facilities for Bugala Island in Lake Victoria, Uganda
Transaction Overview
Date: December 2011

Country: Uganda

Developmental Benefit

GuarantCo Guaranteed Amount: USD 1.8 million

Total note issue : USD12 million (guaranteed tranche USD 5 million)
Beneficiaries & Financing Partners: Nedbank Limited, EAIF and USAID (as co-guarantor)
GuarantCo Additionality:
This is a highly developmental project to bring basic utilities to the largest island in Lake Victoria and has
required imaginative financing to attract the debt required to meet the challenging economics. GuarantCo
played a crucial role over a five year period in underwriting (at times for substantially larger amounts),
structuring and executing the finance. This is the first time that GuarantCo has provided a joint guarantee
with USAID and the first time that Nedbank has been the beneficiary of a guarantee from GuarantCo. In
particular, GuarantCo worked closely with USAID to amend their standard form documentation in order to
align it more appropriately with a project financed structure.
The Kalangala Infrastructure Services project consists of the ownership, financing, upgrade, construction,
operation and maintenance of two roll-on roll-off passenger and vehicle ferries, the upgrade of the islands
66km main road from a dirt road to a gravel road, and a series of solar-powered pump based water supply
systems, in each case to serve the population, institutions and businesses of the Island. This project is part
of an integrated project with Kalangala Renewables.

12

The enhanced infrastructure is required in

order to satisfy the growing and unmet
demand and will be transformative for
Bugala Island. It is highly unlikely that the
existing dilapidated and unsafe ferry would
have been replaced in the foreseeable
future, nor the water supply systems
installed. In addition, the ability for the
project to support the water supply systems
is due to the projects multi-revenue
streams, diversification and economies of
scale and scope provided by other aspects
of the project. As a stand-alone project,
these water schemes are highly challenging
to finance and operate.

KALANGALA RENEWABLES
Joint partial credit guarantee totalling USD 1.4 million covering
part of the financing for a hybrid solar generation system and
associated transmission and distribution systems for Bugala
Island in Lake Victoria, Uganda
Transaction Overview
Date: December 2011

Country: Uganda

Developmental Benefit

GuarantCo Guaranteed Amount: USD 1 million

Total note issue : USD12 million (guaranteed tranche USD 5 million)
Beneficiaries & Financing Partners: Nedbank Limited, EAIF and USAID (as co-guarantor)
GuarantCo Additionality:
GuarantCo played a crucial role over a five year period in underwriting (at times for substantially larger
amounts), structuring and executing the finance. This is the first time that GuarantCo has provided a joint
guarantee with USAID and the first time that Nedbank has been the beneficiary of a guarantee from
GuarantCo. In particular, GuarantCo worked closely with USAID to amend their standard form
documentation in order to align it more appropriately with a project financed structure.
Kalangala Renewables consists of a 1.6 MW (nominal) hybrid solar and diesel power generation system,
33kv transmission system, low voltage distribution system and the installation of a prepaid metering
system to households and businesses on the Island. This project is part of an integrated project with
Kalangala Infrastructure Services.

13

At present there is no operational grid-based

electricity supply on Bugala Island with most
of the population, schools, institutions and
businesses on the Island lacking access to
reliable and affordable electricity. The
extension of daytime activities, such as
studying, will add to the Islands productivity
and education. More specifically, anticipated
improvements include the following:

- Decrease in energy costs per kwh

- Access to more employment opportunities
-Improved literacy due to improved lighting
-Reduced time spent on collecting fuel
-Better healthcare through improved
medications and sanitation measures
-Improved ability to preserve and market
agricultural products
- Improved marketing of the island as a
tourist destination thereby helping to
diversify the Islands economy.

CAMEROON TELECOMMUNICATIONS LIMITED

Partial credit guarantee totalling XAF 20 billion to overcome
regulatory single obligor limits and increase its lending to CamTel
to support the roll out of a National Broadband Network
Transaction Overview
Date: December 2012

Country: Cameroon

Developmental Benefit

GuarantCo Guaranteed Amount: XAF 20 Billion (USD 20 million equivalent)

Total Project Cost: USD 203 million
Beneficiaries & Financing Partners: Standard Chartered Cameroon SA
GuarantCo Additionality:
Cameroon Telecommunications Limited (CamTel) is presently the sole provider of fixed line broadband
in Cameroon which it sells wholesale to internet service providers (ISPs) under the name CamNet. The
National Broadband Network (NBN) project forms a critical part of the Central African Backbone (CAB)
project that is being developed by the World Bank and African Development Bank and which will link
Cameroon, Chad and the Central African Republic to each other, the rest of Africa and the World.
To finance the USD 203 million NBN project cost CamTel secured a USD 168 million export credit facility
from China EXIM Bank (CEXIM) as the NBN project is to be delivered by Huawei, a Chinese OEM.
However as all of CamTels revenues are in CFA Francs (XAF) the companys preference was for the
remainder of the financing to be denominated in XAF. CamTel approached Standard Chartered Cameroon
SA (SCC) to arrange a XAF debt facility for the remaining financing requirement but SCC found that all
the local banks, including itself, were constrained in lending to CamTel by regulatory single obligor limits in
Cameroon. To avoid reverting to off-shore hard currency financing for CamTel SCC approached
GuarantCo to provide a partial credit guarantee to help overcome the regulatory single obligor limit and to
provide the required additional XAF financing to CamTel.

14

GuarantCos support for CamTel has helped

improve the financial viability of the NBN
project by allowing the company to better
match its debt service obligations with its
revenues. It has also stretched the tenor of
the loan from the typical 3 years to 6 years
which further improves the financial viability
of the NBN project where longer tenor is
essential.

World Bank research highlights that

Cameroon lags behind the average
benchmarks for Sub-Saharan Africa for
internet access. Consequently, the NBN is a
project that has significant developmental
value to Cameroon as well as the rest of the
Central African region.

KALUWORKS LIMITED
KSH 750 million partial credit guarantee to credit enhance the
maiden bond issue of the largest manufacturer of aluminium roofing
in East Africa
Transaction Overview
Date: December 2012

Country: Kenya

Developmental Benefit

GuarantCo Guaranteed Amount: KSH 750 million (USD 9 million equivalent)

Total Project Cost: USD 35 million
Beneficiaries & Financing Partners: Ropat Trustees Limited (on behalf of the bond investors)
GuarantCo Additionality:
Kaluworks predicts that the aluminium roofing market in East Africa will grow at a CAGR of circa 30% over
the next 5 years and its sales volumes had grown to the point that the company had reached production
capacity. Kaluworks embarked on an expansion programme in 2011 and had raised the majority of the
funding requirement from local banks in the form of a USD medium term loan. To finance the remaining
funding requirement Kaluworks decided to issue a local currency bond to raise KSH 1.0 billion (USD 12
million).
The Kenyan bond market is very well established and the Nairobi Stock Exchange (NSE) has proved an
attractive avenue to raise medium to long term capital for many companies albeit mainly the larger
corporate borrowers such as Safaricom and KenGen. As Kaluworks was a medium sized corporate and
the bond was to be unsecured Kaluworks local advisors advised the company that it would require credit
enhancement via a third-party guarantor to enable it to raise the required amount of debt and tenor it
desired from local investors. GuarantCo was approached to use its AAA local rating to help credit enhance
the bond and enable Kaluworks to raise more debt on the terms necessary to support the feasibility of the
project.

15

GuarantCos support for Kaluworks provided

a strong demonstration effect, helping a
medium sized company access the capital
markets which typically have only been
available to the largest corporates. It has
also stretched the tenor to 7 years from the
typical 5 years for previous corporate bonds,
which is a crucial step toward meeting the
requirements of future infrastructure related
bond issues where longer tenor is essential.
Kaluworks produces aluminium roofing, a
component of low cost housing. It offers
advantages over steel roofing, lasting 5
times longer, at prices affordable to low
income families in Kenya and other parts of
East Africa.

QUANTUM TERMINALS LTD

GHS 12m partial credit guarantee of long term senior funding
raised by the Quantum Group for the construction and
operation of an LPG loading and storage terminal in Atuabo,
Ghana
Transaction Overview
Date: December 2013

Developmental Benefit

Country: Ghana

Ghana suffers from a severe lack of gas

industry infrastructure resulting in low
penetration of LPG and high usage of
wood and charcoal (taken from largely non
renewable resources), both of which
produce high levels of CO2 emissions
relative to LPG.

GuarantCo Guaranteed Amount: GHS12 million (USD 5.4 million)

Total Transaction Size: USD 10.8 million
Beneficiaries & Financing Partners: Standard Chartered Bank Ghana
GuarantCo Additionality:
Quantum Terminals is part of an Oil & Gas trading Group operating in Ghana. The borrower required
funding in order to construct an LPG storage and loading terminal in Atuabo, Ghana. The terminal is to
provide key supporting infrastructure for domestic LPG to be produced by the Government owned
Atuabo gas processing plant.
Quantum required both hard and local currency financing for the project in order better match its
revenue profile. Standard Chartered, the Groups main banker, was unable to provide the full
requirement of USD 10.8 million, largely due to Central Bank regulations on single obligor limits.
GuarantCos guarantee made it possible for Standard Chartered to offer the local currency tranche for
the project alongside the hard currency tranche, thereby helping the company to achieve an optimal
currency mix in the financing

16

With domestic LPG production due to start

in 2014, Quantum Terminals facility
provides critical support infrastructure,
facilitating the flow of domestic LPG to the
end user.
GuarantCos support enabled Quantum to
raise the required local currency financing
component for the project which will
contribute to increasing availability of
affordable LPG in the country, thereby
helping to lower CO2 emissions and rates
of deforestation.

SA TAXI FINANCE II
ZAR 150m partial credit guarantee for ZAR 200m additional
financing for SA Taxi

Developmental Benefit

Transaction Overview
Date: December 2013

The South African taxi (minibus) industry is

estimated at over 200,000 taxis and has
created more than 400,000 sustainable jobs
directly. The industry is a critical part of the
countrys transportation network, especially
in the disadvantaged suburban areas, and
accounts for over 80% of all public transport
trips

Country: South Africa

GuarantCo Guaranteed Amount: ZAR 150 million (USD 15 million)

Total Transaction Size: ZAR 200 million
Beneficiaries & Financing Partners: ABSA
GuarantCo Additionality:
To meet additional growth in demand for its specialist leasing product, SA Taxi has an
on-going financing requirement. Reduced risk appetite in the international and local
market meant that an initial round of funding was placed with the DFI community.
Through this additional financing, GuarantCo was able to support Absas first
transaction with the Company. The financing was arranged by Transcapital.

17

GuarantCo in Asia

SHRIRAM I
INR 900 million partial credit guarantee of the mezzanine
tranche of a truck finance receivables securitisation in India

Transaction Overview
Date: December 2008

Developmental Benefit
Country: India

Shriram finances small truck owneroperators who would otherwise have to

borrow from unlicensed money lenders.
The finance enables thousands of poor
truck drivers to purchase their own
vehicles
rather
than
remaining
employees.

GuarantCo Guaranteed Amount: INR 900m (USD 19 million)

Total Transaction Size: INR 21 billion

Beneficiaries & Financing Partners: Deutsche Bank, FMO
GuarantCo Additionality:
Deutsche were seeking to syndicate an INR 2,036 million mezzanine tranche in a securitisation of truck
finance receivables but were struggling as there was no investor appetite for mezzanine debt in India.
GuarantCo, in collaboration with FMO, was able to guarantee the mezzanine tranche thereby enabling the
successful securitisation.
GuarantCo and FMOs facility helped demonstrate the commercial viability of mezzanine guarantees in the
nascent Indian securitisation market and today Shriram is able to get such guarantees from private sector
banks. GuarantCo and FMOs intervention helped this transition to more sophisticated financial products,
thus building additional capacity in the local capital markets

19

The mezzanine guarantee was a product

not available from Indian investors. This
intervention enabled a much larger capital
markets transaction to be completed
without which Shriram would have
reduced its support to the sector.
The Shriram group is one of the corporate
leaders in HIV awareness and reduction
programmes. The Shriram Transport
business is essential to the programmes,
as the company has unrivalled access to
truck drivers to run health and education
programs.

CALCOM CEMENT
INR 1,120 million partial credit guarantee of two Indian banks
lending to a new cement plant in Assam, India.

Transaction Overview
Date: September 2009

Developmental Benefit

Country: India

GuarantCo Guaranteed Amount: INR 1,120million (USD 25 million)

Total Project Cost: INR 4,076 million

Beneficiaries & Financing Partners: HDFC Bank, Axis Bank, Cordiant Capital
GuarantCo Additionality:
Although the economic and security situation in the north-east region of India has vastly improved in the
recent past, Indian banks are still cautious lending to projects in the region. HDFC Bank, the lead arranger,
was struggling with syndication of the project debt. GuarantCos guarantee enabled the additional
financing required for the project to achieve financial close.
The amount required was above GuarantCos normal maximum exposure so INR 480m of the total INR
1,120m was syndicated by GuarantCo to Cordiant Capital, a Montreal based Emerging Market fund
manager, thus leveraging in further private sector support.

20

The project will create the largest cement

production facility in the North-East region
of India which suffers from a chronic
cement production deficit. It will help bring
down the abnormally high cement prices
in the region by reducing the substantial
cost of freight that suppliers currently bear
for cement brought in from mainland
India.
It is also the largest single private sector
infrastructure investment in the North
East. Besides providing employment and
increasing economic activity in the
troubled region, the project will support
other infrastructure projects such as
housing, roads and hydropower thereby
multiplying the developmental benefit.

ACKRUTI CITY LIMITED/ HUBTOWN

INR 940 million partial credit guarantee for lending to several slum
redevelopment projects in Mumbai, India.

Transaction Overview
Date: November 2009

Developmental Benefit

Country: India

GuarantCo Guaranteed Amount: INR 940 million (out of initial financing of INR3.9 bn)

Total Project Cost : INR 55 billion

Beneficiaries & Financing Partners: Deutsche Bank, FMO, Cordiant Capital, ICF Debt Pool
GuarantCo Additionality:
This 5 year project financing facility provides Ackruti City Limited (since renamed to Hubtown Ltd) with
early stage funding that was not available from other sources. Most slums exist illegally on municipal land
and thus banks approached by slum dwellers and developers are not able to receive pledge of the land as
security. The process of acquiring ownership rights over the land is lengthy and not without risk. Ambiguity
in the application of local regulations prohibiting acquisition of land further adds to the local banks
discomfort.
Frontier Markets Fund Managers played an active role in structuring the financing and GuarantCos partial
credit guarantee enabled the facility to be increased by over 40%, thus helping it achieve critical size.

21

Nearly half of Mumbais 15 million

inhabitants live in slums. They have
limited access to basic amenities like
clean water and sanitation and have no
security of tenure.
GuarantCos support is helping to rehouse up to 30,000 families in small but
permanent flats with access to clean
water, sanitation, electricity and clear
legal title. This will greatly improve living
conditions and the life chances of children
in particular. Unlike many schemes, the
initiative is voluntary and community led.
Such is the high value of land in Mumbai
that developers are prepared to provide
free, quality housing on the same site to
slum communities, in exchange for
permission to develop & sell part of the
freed up land.

SHRIRAM II
INR 916 million partial credit guarantee of Tier II capital
raising by Shriram

Transaction Overview
Date: September 2010

Developmental Benefit

Country: India

Shriram finances small truck owneroperators who would otherwise have to

borrow from unlicensed money lenders.
The finance enables thousands of poor
truck drivers to purchase their own
vehicles rather than remaining employees.

GuarantCo Guaranteed Amount: INR 916 million (USD 20 million)

Total Transaction Size: INR 2,250 million
Beneficiaries & Financing Partners: Deutsche Bank, FMO
GuarantCo Additionality:
Shriram needs to continually raise additional capital in line with the rising demand for its truck loans.
Deutsche Bank were seeking to syndicate INR 2,500 million of Tier II capital to allow Shriram to expand
their financing operations. Such capital issues compete with higher yielding assets for scarce capital in
India, making obtaining reasonably priced capital funds a challenge
GuarantCo and FMOs participation enabled Shriram to raise the capital at affordable rates which can
be used to leverage much larger borrowings from commercial lenders

22

Shrirams core business of commercial

vehicle finance continues its strong growth.
Shriram is also now seeking to expand its
products
to
finance
other
small
infrastructure equipment servicing Indias
growing infrastructure requirements.

KUMAR URBAN DEVELOPMENT LTD

INR 920 million partial credit guarantee to help finance the largest
slum redevelopment project in Pune, India

Transaction Overview
Date: March 2011

Country: India

GuarantCo Guaranteed Amount: INR 920 million (out of initial financing of INR 2.5bn)

Developmental Benefit
Like most major Indian cities, a large
proportion of Punes population lives in
slums. They have no security of tenure and
have limited access to basic amenities like
clean water and sanitation.

Total Project Cost : INR 24 bn

Beneficiaries & Financing Partners: Deutsche Bank, FMO
GuarantCo Additionality:
Following the success of the slum redevelopment scheme in Mumbai, the state government decided to
extend the scheme to other cities in the state, including Pune, a neighbouring city of Mumbai. KUDLs
project is the first large scale slum redevelopment project under the scheme in Pune.
Commercial slum redevelopment projects typically require only initial seed funding, after which they are
self financing from the stage payments made by buyers of the commercial property element. However,
local banks avoid this seed funding i) discouraged by central bank regulators from lending for property
development and ii) put off by the complex social and environmental issues involved with slum rehousing. The absence of a track record of successfully implemented projects in Pune made it even
tougher for the pioneering KUDL project to raise financing.
Given the lack of funding, KUDL began implementation of the project from their own resources,
completing only 10% of the project in the first 3 years. The 5 year project financing facility provided by
GuarantCo, DB & FMO will allow KUDL to complete the balance rehabilitation in the next 3 years

23

GuarantCos support is helping to re-house

more than 5,000 families in small but
permanent flats. These are provided for free
on the same site by KUDL in anticipation of
profits from development & sale of freed up
land. The flats will have clean water,
sanitation, electricity and clear legal title,
which will greatly improve living conditions
and the life chances of children in particular.
Tenants are helped to set up housing
societies to take over the running and
maintenance of their new buildings with an
endowment from KUDL.

Au FINANCIERS (INDIA) LTD

USD 20 million equivalent partial credit guarantee for long
term senior debt raised by Au Financiers (AuF)

Transaction Overview
Date: March 2013

Developmental Benefit
Country: India

GuarantCo Guaranteed Amount: Up to the INR equivalent of USD 20 million

Total Transaction Size: Up to the INR equivalent of USD 60 million
Beneficiaries & Financing Partners: FMO, CDC Group

GuarantCo Additionality:
AuF is a rapidly growing company, reflecting the underserved nature of its core market. Besides
growing its core business of transportation services financing, AuF is also diversifying into providing
financing for housing and small business enterprises (usually linked to the transportation sector).
AuFs debt requirements grow in line with its portfolio growth, and its strong track record and good
portfolio quality has meant it has been able to raise financing from Indian banks and financial
institutions when required. However to ensure that its funding arrangements keep pace with its growth
plans, AuF needed to diversify its sources of funding. The facility provided by GuarantCo, FMO and
CDC Group will provide AuF with stable long term funds with which it can continue providing affordable
loans to small entrepreneurs.

24

AuF provides financing predominantly for

small
entrepreneurs
engaged
in
commercial passenger/ goods transport
services in rural and semi urban areas of
India. Over 50% of AuFs portfolio is in
Rajasthan, one of Indias poorest states.
These small entrepreneurs play an
important role in the provision of
transportation services in rural and semi
urban India, but are unable to get financing
from banks due to their lack of credit
history and small loan sizes. Such small
entrepreneurs are usually lowly paid
employees working in the transportation
sector, and AuFs financing provides them
an opportunity for social and economic
mobility by owning their own vehicles or
other productive assets.
The facility provided will help AuF provide
c. 15,000 small loans, directly benefitting c.
22,000 people and indirectly benefitting
many more

PAKISTAN MOBILE COMMUNICATIONS LIMITED

PKR 980 million partial credit guarantee to credit enhance an
Islamic bond issue

Transaction Overview
Date: December 2013

Country: Pakistan

Developmental Benefit

GuarantCo Guaranteed Amount: PKR 980 million (USD 9.2 million)

Total Transaction Size: PKR 8 billion (USD 75 million)
Beneficiaries & Financing Partners: Multiple investors
GuarantCo Additionality:
Pakistan Mobile Communications Limited (PMCL) is seeking to expand its network into currently
underserved rural areas thereby enabling access to telecommunication services for a wider proportion of
the population. To fund this capital expenditure PMCL decided to issue a local currency Islamic bond,
known as a Sukuk, of up to Pakistan Rupees (PKR) 8 billion (USD 75 million). Given the limited size of
the corporate bond market in Pakistan PMCL was constrained by existing investors having reached their
regulatory limits either in terms of exposure to PMCL or the telecommunications sector.
GuarantCo helped existing investors overcome their regulatory limits and also, by improving PMCLs local
credit rating from AA- to AAA enabled conservative new Islamic investors to invest. The Sukuk was
structured as a "Service Ijara", the first time this structure has been used in Pakistan, thus helping build
new products and capacity in the local capital markets. Such innovations are an important element of
GuarantCos mission as it works to open up domestic markets to support essential infrastructure finance.

25

PMCLs expansion
into currently
underserved
rural
areas
helps
democratise an important driver of
economic
growth
and
inclusion.
Pakistans mobile phone sector is highly
competitive with very low tariffs leaving
operators often reluctant to invest in new
capacity. As Pakistans leading mobile
phone operator, PMCL is best placed to
bear the considerable capital costs
involved with rural expansion.
GuarantCo, together with the PIDG
Technical Assistance Facility, is currently
evaluating an existing PMCL scheme to
provide remote text based educational
support to women and girls with a view to
funding further roll out in the most
inaccessible regions of NW Pakistan.

SOFTLOGIC FINANCE
LKR 1.4 billion credit guarantee of long term senior funding
raised by Softlogic Finance

Transaction Overview
Date: December 2013

Developmental Benefit

Country: Sri Lanka

GuarantCo Guaranteed Amount: LKR 1.4bn (USD 10.5 million)

Total Transaction Size: LKR 1.4bn
Beneficiaries & Financing Partners: Various local investors, pensions funds and mutual funds
GuarantCo Additionality:
Softlogic needs to continually raise long term funding in line with the rising demand for its commercial
vehicle and other loans. However, due to the limitations of the Sri Lankan market, it is able to access
only short term, relatively expensive funding, which puts pressure on its profitability and also leads to
Asset / Liability mismatches.
In order to access Sri Lankas debt capital markets, the best source for long term finance for it, Softlogic
requires GuarantCos assistance. The facility of LKR 1.4bn provided to Softlogic enables it to raise 5year affordable funds through a pioneering credit enhanced Non Convertible Debenture issuance

26

Softlogic finances small commercial

vehicle
owner-operators
and
other
transport
linked businesses, most of
whom would otherwise not have access to
formal financing from banks.
The demand for Softlogics loan/ lease
products is rapidly rising due to Sri Lankas
strong economy, but raising funding to
meet such growth is challenging.
GuarantCos support enables Softlogic to
raise affordable long term finance for the
benefit of its customers. The facility will
also help in the development of Sri Lankas
debt capital markets by increasing the
acceptability
of
credit
enhanced
instruments.

WATANIYA PALESTINE TELECOM

USD 10 million partial risk guarantee of two Palestinian
banks lending to a start-up mobile telecommunications
operator in the Palestinian Territories

Transaction Overview
Date: January 2009

Region: Palestinian Territories, West Bank

GuarantCo Guaranteed Amount: USD 10 million

Total Project cost: USD 145 million
Beneficiaries & Financing Partners: Bank of Palestine, Commercial Bank of Palestine
GuarantCo Additionality:
By providing a guarantee, GuarantCo enabled Wataniya Palestinian Telecom (WPT) to access USD 25m
of financing from two local banks, the Bank of Palestine and Commercial Bank of Palestine. WPT was
keen to involve as much financial support from the Palestinian banking sector as possible. BoP and CBoP
have substantial USD deposits (Palestine doesnt have its own currency) and were enthusiastic to support
this major investment. However local bank regulations limited the amount they could lend without a
guarantee. Offshore financing also came from overseas lenders including IFC, Standard Bank and
Ericsson Credit (the latter two partially guaranteed by EKN, the export credit agency of Sweden)

27

Developmental Benefit
Mobile phone penetration in Gaza and the
West Bank was a relatively low 29% in
2008 as the service was poor. WPT has
introduced high quality communications
services at affordable prices. Increased
competition is expected to lead to lower
tariffs and reliable services for consumers
which will reduce the cost of doing
business in all sectors. Given the
restrictions on movement for Palestinians,
good mobile telecommunications are
even more critical for social and economic
development than elsewhere.
The single largest private sector
investment in Palestine, WPT will
demonstrate to other investors that the
investment climate has improved and that
other infrastructure projects are possible.

THAI BIOGAS ENERGY COMPANY

THB 425m credit guarantee of long term senior loan provided
by ICBC Thailand

Transaction Overview
Date: April 2014

Developmental Benefit

Country: Thailand

GuarantCo Guarantee Amount: THB 425m (USD 13.5 million)

Total Transaction Size: THB 425m (USD 13.5m)
Beneficiaries & Financing Partners: ICBC Thailand
GuarantCo Additionality:
Thai Biogas Energy Company (TBEC) won contracts to build and operate two biogas plants in south
Thailand. However, its debt requirements for the two plants were too small for the project finance
departments of local banks, and too complex for the banks corporate banking departments. It therefore
required GuarantCos assistance in raising the needed finance.
The facility enabled TBEC to raise the long term, affordable financing it required for the two plants, and
further develop its plans for expansion in to poorer neighbouring countries. The expansion will be
further helped and accelerated by a Viability Gap Funding grant sanctioned by the PIDG Technical
Assistance Facility..

28

TBECs plants clean waste water from

various agri-factories, generating biogass
in the process. The biogas is partly
supplied to the agri-factories to meet their
energy needs, replacing polluting coal/
diesel or HFO. The rest of the biogas is
used to produce electricity for supply to the
local grid.
TBECs plants reduce local air and water
pollution, provide renewable energy &
electricity, and help in mitigating climate
change through methane capture.
The guarantee facility introduces ICBC
Thailand to mid-size renewable energy
financing, which could encourage it to
provide more of such loans in the future.