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Lots of financing options, yet modest results. How to successfully develop and finance more quality projects in emerging markets? (Part 1)
- By Alexander Gordin, Managing Director,
Broad Street Capital Group, New York, NY,
Wed, March 19, 2019
Last week, at a financing round-table organized by the US-Ukraine Business Council (USUBC) - representatives from the IFC, EBRD, OPIC and US EXIM bank reaffirmed their commitment to financing projects and trade with Ukraine. They also demonstrated a whole host of very effective financing and insurance tools, available for use in Ukraine and other emerging markets.
At the same event, these esteemed organizations mentioned multiple success stories and yet each only named half a dozen, or so, of the largest Ukrainian companies (a few were the same names repeated by several institutions). They also addressed fairly effective wholesale funding arrangements with local banks to serve local small and midsize businesses (SMEs).
Yet, each of representatives has acknowledged a serious problem, which acutely manifests itself in Ukraine and in other emerging markets: lack of strong bankable projects in the $10-75 mil. range, a segment widely considered the main economic driver and job generator in emerging market countries such as Ukraine.
Also noted were lack well-developed and bankable public sector projects in segments such as healthcare.
Thus given widespread availability of interested project sponsors, along with multiple public financing tools and risk mitigation products, what can be done to bridge the gap and convert more deal concepts into real deals with realistic financing and true economic impact?
It is all about proper packaging. Although the institutions are willing and able to lend, they each have very specific goals and requirements. Yet, the project sponsors/borrowers, oftentimes are not able to conform to those requirements, despite the fact that their financials and business plans are often sound. (To Be Continued)