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The project involves an equity investment by Proparco in MFX to strengthen the impact investment company’s solvency and liquidity.
Client presentation

MFX Currency Risk Solutions (MFX) supports an underserved segment of the development finance industry, by helping remove a fundamental barrier to local development: the problem of foreign exchange risk management. MFX was set up in 2009 and helps impact investors and recipients of development finance, such as microfinance institutions, effectively hedge their foreign exchange risk. Since it was set up, MFX has worked with international financial institutions to hedge over USD 4.5bn of loans to microenterprises and small businesses in developing countries, in over 55 currencies.

Project description

Proparco will strengthen MFX’s solvency and liquidity through a USD 7m direct equity investment. FinDev Canada will provide financing of up to USD 50m alongside an existing USD 100m guarantee issued by the US International Development Finance Corporation (DFC). The financing comprises an innovative USD 45m guarantee facility, including USD 30m which will be guaranteed by a major private sector insurance company, AXA XL.

Project impact

MFX’s unique proposition is essential to increase local currency funding to local financial institutions, in particular microfinance institutions, thereby benefiting countless microentrepreneurs in emerging and developing countries. PROPARCO’s support will allow MFX to serve high-growth impact sectors, such as clean energy and housing, which increasingly need to lend in local currency. The equity provided by Proparco will make it possible to provide additional microcredits for over 160,000 people (or microenterprises) over the next 5 years.

12/21/2021
Date of signature of the project
Sectors
Multi-country Global
Location
Financing tool
6 200 000 Euros
Amount of funding
USD 7m Equity Investment
Financing details
MFX Solutions, LLC
Client
CES