Korea Provides Backing For IIC’S SME Quasi-Equity Financing Program

01/11/2009

Washington D.C.-The Inter-American Investment Corporation (IIC) announced that it has received generous financial support from the Korea-IIC SME Development Trust Fund to design a strategic framework for developing creative quasi-equity financing instruments for SMEs in Latin America and the Caribbean. Support from Korea will enable the IIC to design a flexible equity-type long-term financing program suitable for SMEs that are at the point in their business life cycle where conventional bank financing does not meet their needs.

Most companies in the region are SMEs, which form the backbone of the economies in which they operate. Among the IIC’s strategic objectives is to provide for mechanisms that can accelerate entrepreneurial success in the smaller emerging regional economies. Through such instruments, the IIC fulfills its key mandate of supporting SME growth, creating jobs, and attracting critical investments.

One of the largest challenges faced by SMEs is finding long-term value-added capital to finance and accelerate their growth. To address this issue, the IIC has announced its commitment to roll out this strategic program to develop creative and sustainable equity-type financing instruments to SMEs. This program will generate important demonstration effects, and will attract other private investors to consider providing this type of financing to SMEs. Through this program, it is expected that SME access to capital will increase and stimulate growth on a large and sustainable scale.

An interesting facet of this program is that it will not only deploy financial resources via equity-type financing, but also seek to provide value-added assistance, such as improved governance structures and practices in those companies receiving IIC financing. This focus on improved governance will be made available through IIC training for SMEs. In addition, technical assistance will also be provided in other key areas, such as environmental best practices, including the introduction of measures to reduce the emission of greenhouse gases.

The Inter-American Investment Corporation is a multilateral financial institution that is a member of the Inter-American Development Bank (IDB) Group. It provides financing (in the form of equity investments, loans, guarantees, and other instruments) and advisory services to private enterprises in Latin America and the Caribbean. In 2008, the IIC reached US$1.5 billion in assets and approved 64 transactions channeling US$300.55 million to SMEs in the region. The IIC’s mission is to promote the economic development of its regional member countries by encouraging the establishment, expansion, and modernization of private enterprises, particularly those that are small and medium in size. For more information on the IIC’s activities, please visit www.iic.int.


 

Contact: Mario Mahler/Michael Apel

Telephone: (202) 623-3924/(202) 623-2521

Email: marioma@iadb.org/michaela@iadb.org