news - Monthly Transaction Overview - September

As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50-year proven track-record of empowering people to employ their skills and improve their quality of life.

These months, we focus on business continuity and recovery in the wake of the COVID-19 pandemic. It is precisely now, during these times of crisis, that it is important to continue to invest in developing economies that are already or expected to be hit hard by the pandemic. While local governments are working hard to minimize the impact on their people and economies, we are needed now more than ever. Hence, we continue to empower entrepreneurs in developing economies to build a better world and boost resilience to withstand the pandemic.

Financial Institutions

SA Taxi
Integrated Minibus and taxi leasing company in South Africa

FI Africa signed an agreement with SA Taxi to convert a USD 15mln COVID-19 subordinated facility signed in Sep-20 into a senior facility. This transaction shows FMO’s commitment to supporting a longstanding partner with a flexible product. SA Taxi’s business has markedly improved during the past months, as taxis resumed operations across the country, providing essential commuting services to the majority of the population. Therefore, our COVID-19 facility fulfilled its goal to provide extra liquidity buffers during the long period of strict lockdown in South Africa.  For FMO, this conversion also represents a reduction in credit risk, while continuing to support the growth of SA Taxi’s portfolio of (micro)entrepreneurs.

JSC MFO Crystal (“Crystal”)
The leading financial inclusion organisation in Georgia

In September, FMO and Crystal signed a USD 10 mln facility in GEL (MASSIF)  for the organic growth of Crystals microfinance portfolio in the rural areas.

Crystal is a commercial Georgian MFI established in 2007 and currently Georgia’s largest MFI. Crystal has a strong basis in West Georgia and in rural areas: 55% of its clients are in semi-urban and rural areas. With its solid foothold in agriculture sector, the support of the small agro business will improve the livelihoods in these communities. Further Crystal has dedicated programs for Women-owned businesses and youth entrepreneurs, hence creating opportunities and promoting gender equality. By extending loans in GEL, FMO supports the Georgian Financial Sector and the Central Bank in the de-dollarization of the Georgian economy. Further it reduces the forex risk for the end customer. Finally, Crystal finds itself in a transition phase: from a provider of micro and small loans towards a bank license-holder able to service the (M)SME market and taking deposits.  This multi-year project will be supported by FMO with CD-funding.

Khan Bank

Mongolia’s largest commercial bank

FMO arranged a USD 120 million syndicated facility to Khan Bank, Mongolia’s leading universal bank and a customer of FMO since 2009, once again renewing its long-term commitment to the Mongolian market. Following FMO and lenders in the syndicated transaction are Proparco, France’s development finance institution (DFI); DEG, Germany’s DFI, IIB (International Investment Bank), and Atlantic Forfaitierungs AG.

Khan, which is celebrating its 30^th anniversary this year, is Mongolia’s largest commercial bank with a market share of 30% of loans that provides access to finance to an estimated 80% of the Mongolian households, serving 2.5 million customers in even the most remote rural areas of the country. The facility, which will be split into two tranches of a 5- and 7-year tenor, will help grow Khan Bank’s SME portfolio, while also significantly contributing to financing the green portfolio of Khan Bank’s end users, further solidifying Khan Bank’s position as a lead SME and retail bank in the country.

Energy

Winch Energy Ltd

Minigrid solar company

FMO, NEoT Offgrid Africa (NOA) and Winch Energy Limited have invested c. US$12 million in mini-grid projects in Uganda and Sierra Leone, two of the countries with the lowest electrification rates in the world. Through the project, 49 villages in Sierra Leone and Uganda will be equipped with off-grid and remotely controllable solar solutions – Remote Power Units (RPU) – that will supply power to nearly 60,000 people. FMO arranged a syndicated facility where, together with Renewable Energy Performance Platform, will lend to WIPP a first tranche of c. US$ 4 million for the portfolio of mini grids in Uganda and Sierra Leone. A second tranche of up to US$ 6 million is also included in the facility to finance future projects of Winch Energy.

Africa Ren

Platform-style co-investment focused on energy solutions

Africa Ren is a EUR 30 mln platform-style co-investment FMO closed together with Metier, targeting solar photovoltaic and renewable projects in West Africa. This platform holds (i) 60% of the shares in the operational solar PV project Senergy 2 in Senegal, (ii) 100% of the shares in Kodeni, an solar PV project in Burkina Faso currently under construction, and (iii) a pipeline of other projects under development, amongst others, the Walo solar PV/storage project in Senegal. This project meets FMO’s strategy of focusing on direct investments, as well as platform-type investments, while fully contributing to Green and Reducing Inequalities projects.