Washington D.C., April 8, 2003—
The International Finance Corporation (IFC), the private sector arm of the World Bank Group,
announced today that it would provide a $50 million revolving mortgage credit line to the Baltic-American Enterprise Fund (BalAEF) aimed at boosting the Company’s mortgage operations in Estonia, Latvia and Lithuania.
IFC also announced
that it will provide up to $7.5 million of income participating subordinated debt to Hanseatic Capital, a wholly
-
owned subsidiary of BalAEF, to expand its mezzanine Mezzanine investments combine debt financing with equity features such as conversion rights, in order to mitigate the risk and generate income while providing for potential equity upside. investments in growth-oriented businesses across the region.
BalAEF was established in 1994 to contribute to the private sector development in the Baltic States. BalAEF’s work in the region has focused on the development and funding of primary and secondary mortgage market activities and the provision of capital to growth-oriented companies. The Fund has originated over 4,000 mortgage loans and has financed over 100 businesses since inception.
IFC played a critical role in the establishment of BalAEF’s mortgage origination activities and mezzanine finance operations into two newly-created entities, the Baltic American Mortgage Company, and Hanseatic Capital LLC. These two entities will significantly expand BalAEF’s ability to grow its operations and strengthen local capital markets.
IFC will work with BalAEF to expand its mortgage lending operations and promote new secondary mortgage market activities. IFC, with a recognized global expertise in these areas, is considering supporting the Company’s plans for international Mortgage Backed Securities issuance, facilitating capital markets access for the mortgage industry.
Karl Voltaire, IFC’s Director of the Global Financial Markets department said: “IFC’s support to BalAEF will strengthen the leading mortgage finance institutions in the region and will serve as a market model for providing affordable mortgage loans to families in the Baltics.”
Hanseatic Capital offers innovative financial solutions to businesses seeking funding for expansion, capital restructuring, or changes in ownership by providing subordinated debt and equity investments. Hanseatic Capital’s investment size typically ranges from $0.5 million to US$2.5 million. IFC’s participation in Hanseatic Capital has served as a catalyst for attracting additional financing to the company.
Edward Nassim, IFC’s Director of the Central and Eastern Europe department, noted: “Each of these two investment vehicles is the first of its kind serving the Baltic States. The standards of operation set by BalAEF and Hanseatic Capital will create new benchmarks and assist in the continuing development of capital markets in the Baltic region.”
Richard Sheridan, President and CEO of BalAEF said, “We are pleased with our new strategic partnership with IFC, supporting strong growth in our investment initiatives.We share a common goal
:
to build upon our tradition of financial innovation in the Baltics.”
BalAEF (
www.balaef.com
) was capitalized at $50 million by the US Government through the US Agency for International Development (USAID). BalAEF is governed by an independent Board of Directors and is run by a professional management team.
IFC’s mission (
www.IFC.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY 02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
