Latin America is on the verge of catalyzing a sustained pipeline of good - or ever better - projects through feasibility study funds available through CAF, the IDB and the IFC, along with local funds in Mexico and Brasil's development banks. Just a few short years ago USTDA was the only game in town with a budget for Latin America of less than $10 million/year. Today total available funding is in the range of $250 million. From 2008 to 2009, CAF's ProInfra Fund alone saw a 36% increase in funded feasibility studies throughout Latin America, totalling US$10,581,834, putting 20+ new projects into the pipeline. Companies and project sponsors can gain access both to the pipeline of good projects created with increasing velocity by the 6 feasibility funds covering the region, as well as to the decision-makers overseeing the funds at the 8th Annual Latin American leadership Forum.
Multilaterals Take the Lead:
CAF's PROINFRA Fund has $50 million available sustainable infrastructure projects that guarantee low carbon emissions - with a commitment to add up to $10 million/year as needed.
The IDB has 4 funds totaling $75 million for project preparation: The InfraFund ($20m) focuses on sustainable infrastructure projects in sectors including transportation and "heavy" infrastructure. The FIRII Fund ($20m Fund for Financing Initiatives for Regional Infrastructure Integration) focuses on regional physical integration and project preparation for cross-border infrastructure operations. The AquaFund promotes water feasibility studies, while the SECCI Fund promotes climate change through renewable energy projects and private investment in clean technology.
A New and Powerful Trend:
MDBs and national infrastructure fund are partnering with private sector investment firms to create hybrid infrastructure funds designed to increase infrastructure project financing. As traditional debt financing has dried up in recent years since the capital markets crunch, these hybrid funds are an innovative approach to project financing.
- Two weeks ago, Macquarie Group Ltd. joined with Mexico's FONADIN (national infrastructure fund) to create a $1 billion fund to invest in Mexico's roads, ports, and and water works. Thanks to the $155 million that FONADIN has already disbursed to conduct feasibility studies on infrastructure projects in the region, this new fund will be well positioned to push these projects forward.
- In a similar move, the IDB has given a $75 million loan to the Ashmore Colombia Infrastructure Fund, which will invest in transportation, energy, water, sewage, communications, logistics, and waste management projects. The fund is expected to reach $500 million, and will be managed by the Ashmore Group and Inverlink S.A., a Colombian advisory firm.
How to Access These Funds:
Each fund has its own set of requirements established for accessing these funds. What many don't know is that the funds can be used to hire specialized consulting services, carry out studies, and conduct other activities specifically directed to preparing infrastructure projects for
financing.
To learn more about feasibility funds throughout Latin America, request a private meeting with fund executives at the 8th Annual Latin American Leadership Forum, or visit:
Regional Funds:
CAF: ProInfra:
http://www.caf.com/view/index.asp?ms=17&pageMs=45235&new_id=39128
IDB: InfraFund:
http://www.iadb.org/topics/transportation/infrafund/intro.cfm?lang=en
FondElec Capital Advisors: Latin American Clean Energy Services Fund (FLACES) US$31.6M equity investment fund:
http://www.fondelec.com/
National Funds:
Mexico: FONADIN:
http://www.fonadin.gob.mx/
Brazil: BNDES National Infrastructure Bank FEP fund:
http://inter.bndes.gov.br/english/fep_in.asp
Global Funds:
IFC: InfraVentures Fund:
http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=7983B7397F9D19D4852574AC004B8CEE
