GuarantCo, part of the Private Infrastructure Development Group (PIDG), has closed its first syndication transaction via the credit insurance market with leading Lloyd’s (re)insurer Canopius, which was arranged by specialist CPRI broker BPL Global. The transaction involved the use of a non-payment insurance policy covering exposure on a GuarantCo portfolio transaction.
The transaction is a significant first for GuarantCo and the Private Infrastructure Development Group as the transaction mobilises a new form of private sector support for its projects. The credit insurance market represents a significant and growing source of capacity with which GuarantCo can share the credit risks associated with growing its portfolio. In turn, relieving the potential cost of these risks from GuarantCo’s balance sheet, via its credit insurance policy with Canopius, will provide unleveraged capacity to grow GuarantCo’s portfolio and support the company’s pursuit of its strategic and developmental impact objectives. As a result of the syndication, GuarantCo will be able to guarantee larger transactions whilst managing its single sector, geography and obligor limits, and make a further contribution to bridging the infrastructure financing gap in lower income countries across Africa and Asia.
This pathfinder transaction clearly demonstrates to the insurance market the viability of supporting GuarantCo’s impact driven transactions and is a major stepping stone towards a deeper relationship with the insurance sector, which we hope will ultimately help to address the major infrastructure financing needs in Africa and Asia.
Layth Al-Falaki, CEO at GuarantCo, said: “We are delighted to have closed our first syndication transaction for GuarantCo and PIDG as a group. We are hoping that through this landmark placement, we will set a track record for GuarantCo within the insurance market and that there will be similar placements going forward. This will further strengthen our strategic ambition to bridge the infrastructure financing gap in countries across Africa and Asia where it is needed most.”
Charlie Radcliffe, Deputy CEO at BPL Global, said: “From the start, we were eager to facilitate this landmark transaction for GuarantCo. We were able to find the right structural solution for the policyholder, pairing them with Canopius’ specialist offering, in what we hope will be the start of a long and fruitful relationship. Once again, we have demonstrated how the private insurance sector can help to bridge the infrastructure financing gap and support much-needed development in emerging markets.”
Stephen Pike, Head of Credit & Political Risk at Canopius, said: “We are pleased to have supported GuarantCo on structuring a first-of-its kind financing transaction, which will be used to help their mandate to close the funding gap for vital infrastructure projects across Africa and Asia. By bringing together our portfolio analysis skills and the dedicated structuring capabilities within our credit and political risk business, we were able to design a bespoke solution to enable GuarantCo to help manage non-payment risks and pursue the growth of its portfolio in confidence. The successful completion of this transaction not only demonstrates the strength of Canopius’ offering, but the power of the private insurance sector to enable projects that will have a positive and lasting impact on developing communities around the world.”