IDB Invest aims to increase the number of financing deals it approves by 200% once its shareholders approve a capital increase next year, the multilateral lender’s CEO James Scriven told LatinFinance.
Negotiations are under way with the 47 member countries that own IDB Invest to sign off on a capital increase that would double the size of the institution, Scriven said.
The measure would allow IDB Invest, the private-sector financing arm of the Inter-American Development Bank (IDB), to significantly increase the number of loans and capital market deals it supports.
“Today, we are doing 100 deals a year, and our idea is to do 300 deals a year,” Scriven said.
The capital increase could be approved in March during the IDB’s annual meeting in the Dominican Republic, and Scriven expects it to consolidate IDB Invest’s transformation into an institution that helps to crowd in private sector investments across the region.
“The whole idea behind the capital increase is to put a few more zeroes to what we are doing, and also to de-risk foreign investments that could come into the region,” he said. “The premise is that to be able to bring more investments, we will need to take more risks. We will see more de-risking instruments to attract FDI to our region.”
In order to achieve that, Scriven said IDB Invest also plans to continue introducing new financial instruments and to use its balance sheet to promote innovative solutions.
“We are moving away from being an investor to being a catalyzer of investments. Our goal is to put together impact assets with impact investors,” he said. “In some cases, we can provide guarantees, in some cases we can provide financing, in others we can take first loss. The instruments are centered on how to solve a problem.”
B-BONDS
Scriven noted that IDB Invest is currently the region’s only provider of B-bonds, which allow it to bring institutional investors into financing deals. Other innovative structures that the bank has promoted include unfunded credit protections, tier-2 instruments, mezzanine financing and local-currency guarantees.
Among the sectors it targets, energy infrastructure is expected to remain the lender’s biggest recipient of financing in the region; road and airports also account for a considerable part of its portfolio. IDB Invest is also focussed on social infrastructure such as hospitals and universities, as well as water and sanitation in countries such as Brazil.
Gaining importance are sectors such as agribusiness and critical minerals for the energy transition. Green hydrogen is another growing area of interest in a number of countries, especially Chile.
“We are seeing a significant appetite to invest through institutions like us, which give some form of de-risking to investors,” Scriven said. “Maybe because we play a countercyclical role, appetite for our business has grown significantly.”