Mobilizing funds for our markets is one of FMO's key strategic
goals. Our reputation and experience in higher-risk countries and
markets often gives other financial institutions and commercial
banks the comfort to come on board. In this way, we mobilize more
funding, leading investments and catalyzing commercial and
institutional investors to frontier markets.
In 2011, we placed more focus on finding opportunities to
catalyze funds in which FMO was either joint or sole mandated lead
arranger (MLA) in transactions of US $50 million or larger. By the
end of the year, we had mobilized a total of US $823 million
through syndicated loans, parallel loans and/or risk-sharing
agreements, and closed five large transactions as joint or sole MLA
of at least US $50 million.
Our efforts to mobilize third-party funds were not helped by the
economic crisis, which prompted many Western commercial banks to
retreat from emerging markets into their home markets. This was
compensated to an extent, however, by other institutional investors
and non-European and regional banks. This 'south-south' trend could
grow as banks in countries such as Brazil grow bigger and more
active both in and outside their own countries.
Even though many professional commercial investors have lost
interest in bank debt and equity as an asset class to invest in,
there is a growing interest in impact investing in the capital
markets. Sustainability is increasingly recognized as an integral
part of business, both by our clients and by potential
For 2012, catalyzing third-party funds remains high on our
agenda, and we aim to mobilize an ever higher amount. We will focus
on taking lead management roles in transactions in our focus
sectors, thereby mobilizing funds from both commercial investors
and other development finance institutions. We expect catalyzing
commercial funds to take place mainly in more developed emerging
markets. At the same time, our partnerships with other
international DFIs will enable us to catalyze money in countries
where it is difficult for commercial investors to operate.
Some emerging market banks are now taking lead roles in world
rankings, creating good liquidity in some markets. In Asia and
Latin America in particular, liquidity is strong and competition
among banks fierce. Meanwhile, a second tier of strong emerging
countries is arising like - South Africa, Turkey, Indonesia,
Vietnam and Mexico. The financing needs of emerging markets might
increasingly be met by regional offerings, which suggests good
opportunities to catalyze funds regionally.
As well as catalyzing money through debt products, we plan to
work further on fund management initiatives begun in 2011. We will
continue discussions about setting up an African fund-of-funds with
a group of Kenyan pension funds as anchor investors.