The IIC offers financing to companies that lack access to medium- or long-term resources on the capital and financial markets. The long-term financing products used by the IIC for this purpose include direct loans, direct equity or quasi-equity investments, lines of credit to local financial intermediaries for onlending in the form of smaller loans, agency lines with local financial institutions for joint lending, investments in local and regional private equity funds, and guarantees for and investments in capital market offerings.
The IIC finances expansion projects in all economic sectors (with the exception of the trade and manufacture of arms, gambling, and real estate speculation). It also finances new (greenfield) projects on a limited and selective basis. IIC financing may be used for local and foreign currency investments in fixed assets, permanent working capital, and to cover pre-operating costs. Though the IIC does not take on a managerial or administrative role in any of the enterprises in which it makes equity investments, it may request representation on the company’s board of directors.
The IIC may also serve as an adviser to companies looking to attract other resources for IIC-funded projects in the form of additional financing, technology transfers, and technical and managerial know-how. These resources are mobilized through cofinancing and syndication arrangements, support for security underwriting, and the identification of joint venture partners.
There are several basic eligibility requirements for IIC financing. Typically, eligible enterprises must be majority-owned by citizens of the IIC’s 26 regional member countries. However, the IIC will finance joint venture companies that are not majority-owned by citizens of regional member countries on a limited basis. While profitability and long-term financial viability are prerequisites for IIC financing, the IIC also takes into account other criteria relating to the company’s impact on economic development.
Qualifying companies must be profitable ventures with growth potential in need of medium- or long-term funding to capitalize on their market potential.
Companies must have capable management who share the IIC’s commitment to transparency and compliance with national accounting, tax, and environmental standards and labor practices.
The IIC’s target market consists of companies with annual sales ranging from US$5 million to US$35 million. However, it also works on a selective basis with companies whose sales exceed US$35 million per year.
Other selection criteria have to do with the company’s impact on contributing factors to economic development such as:
- job creation;
- generation of net foreign exchange income or promotion of foreign exchange savings;
- transfers of resources and technology;
- local management capacity-building;
- promotion of broader public ownership of private enterprises; or
- economic integration of the Latin American and Caribbean region.