The International Finance Corporation (IFC), a member of the World Bank Group, has announced a $100 million investment in leading Pan-African banking group Ecobank Transnational Incorporated (ETI) via its Asset Management Company LLC, its wholly-owned subsidiary.
The investment is targeted at strengthening ETI’s capital base, scale up in key markets, and expand its operations across its network of 32 African countries. ETI’s wide reach makes it an ideal partner to address development challenges in Africa as well unlocking the economic potential in emerging economies on the continent.
The bank, which has already been instrumental in IFC’s Africa MSME Program, providing much needed support for the growth of small businesses across the continent, has been working with IFC since 1993 to increase access to finance, improve trade liquidity, and strengthen the banking sector in Africa. The IFC has also been providing advisory services to help in ETI’s expansion of microfinance, small and medium finance, and mortgage finance businesses.
In 2009, IFC became a shareholder in ETI following the conversion of a $100 million loan into an equity stake of 9.2 percent. This is the second time IFC Asset Management Company funds have made investments in ETI. In June 2010, IFC Cap Fund and IFC ALAC Fund committed $150 million in loans, with half the amount convertible into equity.
Furthermore, three funds managed by IFC Asset Management Company – the IFC Capitalization Fund (IFC Cap Fund), the IFC African, Latin American, and Caribbean Fund (IFC ALAC Fund), and the Africa Capitalization Fund – will invest up to $100 million in a subscription of ETI shares, for a combined stake of about 7.2 percent. This investment comes as part of a successful fundraising program by ETI, which has also attracted large institutional investors – Nedbank and Public Investment Corporation of South Africa.
Speaking on the development, Rashad Kaldany, IFC Acting CEO and Executive Vice President said: “Our relationship with ETI continues to grow and this transaction is a crucial step in IFC’s strategy of improving access to finance in Sub-Saharan Africa”
“It will enable ETI to increase lending to underserved market segments, such as agribusiness, micro, small, and medium enterprises, and climate change. It will also promote trade and integration, and generate employment where it is needed most”, he added
Further strengthening the tie between the IFC and ETI, Thierry Tanoh, former IFC Vice President for Latin America and the Caribbean, Sub-Saharan Africa, and Western Europe, has become CEO of Ecobank.
