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IFC Helps FINCA Azerbaijan Manage Currency Risk, Expand Local Currency Lending

Baku, Azerbaijan, June 13, 2013— IFC, a member of the World Bank Group, is providing risk management support to FINCA Azerbaijan, one of the country’s microfinance leaders, to hedge part of its foreign currency borrowings into Azerbaijani Manat and enhance its ability to increase access to funding for micro-entrepreneurs, particularly in rural areas.
IFC has executed the first currency-forward transaction with the notional amount of $10 million under an agreement signed in April 2013. This will allow FINCA Azerbaijan to hedge its currency risk in US dollars and continue lending through its large network of branches serving over 140,000 entrepreneurs.
“We are delighted to deepen our partnership with IFC, a strategic investor in both FINCA Azerbaijan and the FINCA network, with this risk management transaction,” said Manish Sane, CEO of FINCA Azerbaijan, a non-bank credit organization. “This deal enhances FINCA Azerbaijan's ability to lend to its customers in local currency, while effectively managing its currency risk exposure.”
Thomas Lubeck, IFC Regional Manager for the South Caucasus, said: “IFC is delighted to support FINCA Azerbaijan with risk management products. The purpose of this transaction is to remove unnecessary currency risk, so the company can focus on its core business – supporting small and micro-businesses in Azerbaijan.”
In 2011, IFC provided a $7 million senior loan in local currency to FINCA Azerbaijan to increase access to finance for micro and small business owners in remote and rural areas, helping some of the region’s most vulnerable people.
Azerbaijan became an IFC member in 1995. Since then, IFC has invested almost $393 million and mobilized nearly $73 million from other lenders in 67 projects in financial services, infrastructure, and manufacturing. IFC has also implemented advisory projects focused on private sector development. In addition, the State Oil Fund of the Republic of Azerbaijan has committed $350 million to three funds managed by IFC Asset Management Company that invest alongside IFC in private sector projects in emerging markets.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit .
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