Istanbul, Turkey, October 5, 2009—IFC,
a member of the World Bank Group, today unveiled a new program to
tackle rising levels of troubled assets and corporate debt in developing
countries in an effort to help clean up financial systems, get credit flowing,
and support recovery from the global financial crisis.
IFC will contribute up to $1.55 billion
to the Debt and Asset Recovery Program over three years and expects to
mobilize up to an additional $5 billion from other international financial
institutions and private sector partners. DARP, as the program is known,
will invest directly in businesses that need to restructure debt and in
pools of distressed assets and indirectly via investment funds targeting
pools of distressed assets and companies.
Lars Thunell, IFC Executive Vice President
and CEO, said, “High levels of troubled assets in developing countries
mean individuals and businesses suffer reduced access to affordable finance.
By helping companies and banks deal with debt and troubled assets, the
Debt and Asset Recovery Program will address this issue and support recovery
from the global financial crisis.”
In initial transactions under DARP,
IFC is collaborating with the European Bank of Reconstruction and Development
and CRG Partners, a restructuring fund manager focused on Central and Eastern
Europe. IFC is working on a distressed debt facility with Standard Bank
of South Africa, and partnering with Tata Capital and Capital Services
to launch a company to service non-performing loans in India.
IFC is in discussion with IFIs and governments
including the German DEG – Deutsche Investitions- und Entwicklungsgesellschaft
mbH, OPIC, the Development Bank of Austria, and the government of Austria
to collaborate on projects focusing on debt restructuring initiatives under
DARP, and is working on transactions with private sector partners in Europe
and Central Asia, Latin America and the Caribbean, and East Asia.
Due to the global financial crisis,
businesses face difficulties refinancing debt and banks have rising levels
of non-performing loans. These problems are projected to worsen with up
to $1.5 trillion in emerging market corporate debt due to mature in 2009,
according to the International Monetary Fund.
DARP will support projects in low-income
and poor countries. It was launched at the Private Sector Development Institutions
Roundtable event held in Istanbul during the World Bank Group and IMF Annual
IFC, a member of the World Bank Group,
creates opportunity for people to escape poverty and improve their lives.
We foster sustainable economic growth in developing countries by supporting
private sector development, mobilizing private capital, and providing advisory
and risk mitigation services to businesses and governments. Our new investments
totaled $14.5 billion in fiscal 2009, helping channel capital into developing
countries during the financial crisis. For more information, visit www.ifc.org.