The International Finance Corp (IFC), a member of the World Bank, is investing $70 million in a specialised Colombian finance institution which aims to mobilise the financial resources needed for the country’s imminent large-scale infrastructure projects.
The $70 million is being invested in Colombia’s national development bank, Financiera de Desarrollo Nacional (FDN), with the IFC taking a 20 percent stake in FDN, according to a statement.
The investment may help attract more foreign private capital into the country as foreign investors will feel more comfortable given the support of the IFC.
“This investment will be instrumental in providing infrastructure finance and developing capital markets in Colombia,” said Jin-Yong Cai, IFC executive vice president and chief executive officer in the statement. “It will support inclusive economic growth, and improve the overall competitiveness of the Colombian economy,” he added.
FDN will operate as a specialised financial institution that will mobilise funding for Colombia’s infrastructure projects, including a new toll road programme that will represent a crucial upgrade to solve some of the country’s infrastructure bottlenecks, the statement said.
Colombia needs about $40 billion in infrastructure investment and FDN will help ensure the participation of the private sector in financing these projects, which will bolster the country’s sustainable economic growth and improve its competitiveness.
FDN will serve as a key supporter for these plans and help Colombia’s financial industry meet the financing need by offering long-term loans and tailor-made financial tools that will attract institutional investors to the projects. FDN will initially focus on supporting the financing of the toll road programmes, but will eventually help address the financing needs of all segments of the Colombian infrastructure sector.
In addition to its financing role in the infrastructure sector, FDN will bolster local know-how through a special public-private partnership unit that will focus on structuring infrastructure projects.
In October last year, IFC and FDN each provided $2 million to support the creation of this unit.
The unit will help form well-structured agreements between governments and firms to provide infrastructure and public services—at the national and regional level.
In Colombia, IFC is engaged in supporting sectors essential to social and economic development, such as infrastructure, health, education, agribusiness, and public-private partnerships to build ports, roads, and airports.
IFC also promotes access to finance for micro, small, and medium enterprises, and works on improving the investment climate by simplifying regulations and royalty management.
IFC’s current investment portfolio in projects in Colombia is worth $1,5 billion, of which $500 million was mobilised or syndicated from other banks.