MONTREAL, January 13, 2022 / PRNewswire / – FinDev Canada, US DFC, Proparco and AXA XL announced they are providing an innovative financing solution to MFX Currency Risk Solutions (MFX) to improve its liquidity and help it position itself for its next phase of growth. MFX is a social purpose company that supports impact investing in emerging and developing countries by providing hedging products that mitigate currency risk.
FinDev Canada will provide funding of up to US $ 50 million parallel to an existing one $ 100 million warranty issued by US DFC. Funding includes an innovative solution $ 45 million guarantee facility, including $ 30 million will be provided by the AXA XL Group companies, a group of large private sector insurance companies. MFX’s solvency and liquidity will be further strengthened by a direct equity investment by Proparco of US $ 7 million. Proparco will become the second shareholder of MFX.
MFX supports an underserved segment of the development finance industry, helping to overcome a fundamental barrier to local development: the burden of managing currency risk. Founded in 2009, MFX helps impact investors and beneficiaries of development finance, such as microfinance institutions, to effectively hedge their currency risk. Since its inception, MFX has worked with international financial institutions to cover more than US $ 4.5 billion in loans to micro and small enterprises in developing countries, covering more than 55 currencies.
MFX now offers a diverse product line designed to make currency hedging more efficient and accessible to impact investors across multiple industries, including renewable energy, agriculture, health and housing. MFX also offers training and advisory services to enable investors and other industry players to better understand currency risk, define hedging strategies and develop comprehensive currency risk management approaches.
“We are proud to be part of this innovative partnership between development finance institutions and private insurance to support MFX, a unique entity that plays a critical role in providing currency hedging services that are not commonly available. in many markets, ”said Paulo martelli, Vice-President and Chief Investment Officer of FinDev Canada. “This transaction supports our goal of strengthening local markets by promoting a greater diversity of financial service providers as well as increased access to finance for underserved people, such as micro, small and medium enterprises and women entrepreneurs. . “
“This transaction is an important milestone for the impact investing industry,” said Brian cox, CEO of MFX. “The support from FinDev Canada and Proparco will allow MFX to serve high impact growth sectors such as clean energy and housing which increasingly need to lend in local currency. The addition of AXA XL to share the risk with FinDev Canada and DFC means for the first time, private insurance will be deployed to support impact lending in local currency. ”
“DFC welcomes this new collaboration of FinDev Canada, Proparco and AXA XL in support of MFX alongside DFC’s existing loan guarantee, expanding the funding and financial tools available to help strengthen MFX’s critical mission. “, said Jim polan, vice-president of DFC Development Credit Bureau. “MFX advances the impact of development in emerging markets around the world by providing finance to small businesses in local currencies, thereby promoting access to finance among under-banked communities. ”
“As one of the largest insurers in the world, AXA XL believes that our goal is to ‘act for human progress by protecting what matters’, explained Jeff Abramson, Special Risks Underwriting Manager within the Political and Credit Risk Group of AXA XL. “This is why we are delighted to be a part of this pioneering transaction, partnering with FinDev Canada to enhance MFX’s ability to fulfill its mission and catalyze impactful investments in emerging and developing markets. ”
“Proparco is proud to join the shareholders of MFX and to partner with FinDev Canada, US DFC and AXA XL to support the essential role of MFX in the local currency financing chain. MFX’s unique proposal is essential to increase local currency financing of local financial institutions, especially microfinance institutions, thereby benefiting countless micro-entrepreneurs in emerging and developing countries, ”said Guillaume Barbarossa, head of the Banks and Financial Markets division of Proparco.
Local market development
MFX offers impact investors or development finance recipients the option of hedging local currencies with little or no collateral. Guarantee requirements can tie up funds otherwise available for development finance. The loan to MFX is expected to lead to a greater flow of international capital to critical sectors of national economies in emerging and developing markets.
Women’s economic empowerment
MFX was created to meet a critical need in the field of microfinance. Microfinance investment vehicles and microfinance institutions (MFIs) represent a significant portion of its clientele. Many of these MFIs serve a majority, or sometimes exclusively, women by providing them with access to financial services, especially loans to microenterprises. As such, their currency hedging products have a significant indirect impact on women’s economic empowerment.
Development finance institutions and COVID-19
FinDev Canada’s mandate is to support companies that are present in the regions most affected by the COVID-19 pandemic. The investments will help ensure that developing markets continue to have liquidity, providing important support for the resumption of the economic and social consequences of this crisis.
About FinDev Canada
The Development Finance Institute Canada (DFIC) Inc., operating under the FinDev Canada brand, is a Canadian institution dedicated to providing financial services to the private sector in developing countries with the aim of reducing poverty through economic growth by focusing on three main themes: economic development through job creation, women’s economic empowerment, and climate change mitigation. The Development Finance Institute Canada Inc. is a wholly owned subsidiary of Export Development Canada (EDC).
Situated at Washington DC, MFX Currency Risk Solutions is a social enterprise that supports impact investing with affordable hedging products and risk management training. MFX believes that when currency and market risks are managed effectively, development loans can reach more entrepreneurs at the bottom of the pyramid, in a more sustainable manner and at a lower cost.
American International Development Finance Corporation (DFC) is the American development bank. DFC partners with the private sector to fund solutions to the most critical challenges facing the developing world today. We invest in sectors such as energy, health, critical infrastructure and technology. DFC also provides finance to small businesses and women entrepreneurs to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights and workers’ rights.
About AXA XL
AXA XL, the property and casualty and specialty risks division of AXA, provides insurance and risk management products and services for midsize businesses to large multinationals, and reinsurance solutions to insurance companies around the world. whole. We work in partnership with those who move the world forward.
In the United States, AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Port Insurance Company, XL Insurance America, Inc., XL Specialized insurance company and THE Insurance Company. In Canada, insurance cover is taken out by XL Specialized insurance company – Canadian branch. Coverage can also be purchased through Lloyd’s Syndicate # 2003. The covers underwritten by Lloyd’s Syndicate # 2003 are placed in the name of the member of Syndicate # 2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA Group. Not all insurers operate in all jurisdictions and coverage is not available in all jurisdictions. Information correct as of January 2022. For more information, visit www.axaxl.com
Proparco is the private sector financing subsidiary of the Agence Française de Développement Group (AFD Group). It has been promoting sustainable economic, social and environmental development for over 40 years. Proparco finances and supports both companies and financial institutions in Africa, Asia, Latin America and the Middle East. Its action focuses on key development sectors: infrastructure, mainly for renewable energies, agrifood, financial institutions, health and education.
Its interventions aim to strengthen the contribution of private actors to the achievement of objectives Sustainable Development Goals (SDGs) adopted by the international community in 2015. To do this, Proparco finances companies whose activity contributes to creating jobs and decent income, providing essential goods and services and fighting climate change. For a world in common.
For more information: www.proparco.fr and @Proparco.
View original content: https://www.prnewswire.com/news-releases/findev-canada-us-dfc-proparco-and-axa-xl-partner-with-mfx-currency-risk-solutions-to-facilitate – impact-investing-in-emerging-and-developing-markets-301460001.html
SOURCE AXA XL