Washington, DC, December 20, 2005—The
International Finance Corporation, the private sector arm of the World
Bank Group, today announced it will participate in the creation of the
European Fund for Southeast Europe, which is designed to spur lending to
micro and small businesses in the region.
The European Fund for Southeast Europe,
promoted by Germany’s development bank, KfW, is a collective investment
vehicle that will channel long-term resources to micro and small enterprises
through partner lending institutions such as banks, specialized microfinance
institutions, and microfinance nonprofit organizations in the region.
In parallel to the fund, a development
facility is being established to provide the partner lending institutions
with technical assistance to strengthen their operations.
Jyrki Koskelo, IFC’s Director for Global
Financial Markets, said, “The European Fund for Southeast Europe presents
a rare opportunity to create a public-private partnership that leverages
private capital to support the types of micro and small businesses that
are such vital engines of economic growth and job creation.”
The fund has been incorporated in Luxembourg
for an unlimited duration, with a tiered risk-sharing structure, under
the management of Luxembourg-based Oppenheim Pramerica Asset Management
S.à.r.l. in a consortium with Bankakademie e.V. as the microfinance Adviser.
Dr. Klaus Glaubitt, Vice President at
KfW, said, “IFC’s participation in the fund, through debt mobilization
to achieve scale, fits our strategy of supporting well-managed and financially
sustainable microfinance institutions by providing them with financing
to help increase their lending to microenterprises.”
Shahbaz Mavaddat, IFC’s Acting Director
for Southeast Europe and Central Asia region, added, “The fund’s tiered
risk sharing structure aims to attract significant private sector investment
While the fund plans to attract commercial
capital from multilateral and private institutional investors, via multiple
closings, to reach the initial target of EUR 500 million (about $600 million)
in five years, its size at first closing amounts to nearly EUR 142 million
IFC’s participation consists of up
to EUR 20 million ($24 million) in mezzanine “B” shares with 10-year
maturity and up to EUR 10 million ($12 million) in senior “A” shares
with seven-year maturity. This represents nearly 21 percent of the
total capitalization of the fund. Other investors, participating in this
first closing, include KfW, the Netherlands Development Finance Company,
the German and Swiss governments, and Bankakademie.
The International Finance Corporation
is the private sector arm of the World Bank Group and is headquartered
in Washington, D.C. IFC coordinates its activities with the other
institutions of the World Bank Group but is legally and financially independent.
Its 178 member countries provide its share capital and collectively
determine its policies.
The mission of IFC is to promote sustainable
private sector investment in developing and transition countries, helping
to reduce poverty and improve people’s lives. IFC finances private sector
investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY05, IFC has committed more than $49
billion of its own funds and arranged $24 billion in syndications for 3,319
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY05 was $19.3 billion for its own account and $5.3 billion held
for participants in loan syndications. For more information, visit