The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), respectively the World Bank’s private investment arm and its guarantee unit, are helping finance an extension to the light rail network of the Turkish city of Izmir.
Acting as lead arranger, IFC provided a €12 million loan alongside parallel lenders including the French Agency for Development (AFD) and the European Bank for Reconstruction and Development (EBRD). The institution has also mobilised another €23.5 million through MIGA’s involvement as the guarantor of a concomitant loan provided by Dutch-based ING Bank (ING).
The proceeds of the financing round, totalling nearly €72 million, are earmarked for the acquisition of 85 light rail transit vehicles intended to add capacity to the network as new stations are created.
Turkey’s third largest city and the country’s main port on the Aegean Sea, Izmir is host to about four million inhabitants. It started working with IFC and MIGA in 2012, sealing a €45 million financing package provided by the former for the municipality’s Traffic Management and Emergency Response project in December of that year.
IFC then arranged a financing package of €111 million for the Sea Transportation project in May 2013, where MIGA provided guarantees to ING for €50.3 million. In March 2014, IFC invested €55 million and coordinated a further €110 million for two urban tram lines, with MIGA issuing €66.9 million in guarantees to commercial lenders on this project.
“This investment is part of IFC’s strategy to step up its support to local governments in Turkey by providing access to long-term financing and helping implement urban infrastructure projects,” Wiebke Schloemer, IFC’s head of infrastructure in Europe, Middle East and North Africa, said in a statement.
IFC and MIGA have a $4.3 billion outstanding portfolio and $1.1 billion in outstanding exposure to Turkey respectively.