Introduction to Financial Markets
Mobilizing funds for our markets is one of FMO’s key strategic goals. Our reputation and experience in higher-risk countries and markets often gives other financial institutions and commercial banks the comfort to come on board. In this way, we catalyze commercial and institutional investors to frontier markets.
In 2012, we focused on finding opportunities to catalyze funds in which FMO was either joint or sole lead arranger of US$50 million or more. By year-end, we had mobilized a total of US$800 million through syndicated loans, parallel loans and/or risk-sharing agreements, and closed 10 large transactions of at least US$50 million as joint or sole lead arranger.
While we were successful in mobilizing funding from the international development finance community, it was increasingly challenging to catalyze commercial investors in 2012 as many of FMO’s traditional commercial syndication partners and direct funders continued to feel the effects of the credit crisis and Basel III requirements.
Although many Western banks have limited appetite for high-impact investing in frontier markets, South-South financing is on the rise. Many emerging market banks, particularly in Asia and Latin America, have healthy liquidity, which presents new catalyzing opportunities for FMO. The financing needs of emerging markets may increasingly be met by regional offerings and FMO is responding to this trend by mobilizing funds regionally where possible, evidenced by our attracting more than a dozen Southern investors in 2012.