Proparco offers loans (from EUR 3m to EUR 100m), in foreign or local currency, to companies and financial institutions with long maturities (up to 20 years), and a grace period for the repayment of capital where warranted. This financing is tailored to the environment and needs of clients.
Proparco’s action bridges the gaps of local financial systems that are not always able to provide appropriate financing for the needs of their economies.
Proparco meets this objective without causing market distortions or crowding out effects for private financial actors, particularly local and international commercial banks. Its operations are complementary to their services (principle of subsidiarity), on terms that are as close as possible to those of the market, without grants or elements of concessionality.
By implementing a full range of financial instruments, from senior loans to equity, including convertible bonds and guarantees, Proparco can meet most of the financing needs that would not be covered by private actors.
In addition to their subsidiarity, its operations aim to contribute to achieving real progress in sustainable development in Southern countries (principle of additionality).
Equity and quasi-equity
PROPARCO CAN ALSO MOBILIZE VARIOUS EQUITY INSTRUMENTS:
- Minority equity investments – direct or indirect – via financial intermediaries, particularly investment funds – in the capital of companies;
- Subordinated or equity loans;
- Shareholders’ current accounts;
- Convertible bonds or bonds redeemable for shares, etc.
Proparco’s signature can provide a guarantee of solvency and liquidity. A guarantee provided by Proparco can take various forms and have different types of underlying components (loans in foreign or local currency, bond issues, UCITS listed on a financial market...).
Proparco thereby helps mobilize resources for banks or institutional subscribers and can help increase the depth and liquidity of financial markets.
Financing in local currency
A large number of companies, especially small companies, do not have incomes in euros or dollars.
In order to reduce their exposure to the exchange rate risk, which is likely to weaken them, Proparco seeks financing solutions in local currency.
Depending on the case, it uses financial markets that offer hedging instruments for the main currencies (Mexican peso, South African rand, Indian rupee…) or the multi-donor Currency Exchange Fund (TCX) fund. This fund gives it access to currency hedging products for less common foreign currencies.