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Developmental Investment Activities
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The IIC's developmental financing program targets small and medium-size private companies in Latin America and the Caribbean with limited access to long-term financing.
IIC loans are denominated in United States dollars. Loan amounts may be up to 33 percent of the cost of a new project or up to 50 percent of the cost of an expansion project. Loan repayment periods generally range from five to eight years (up to a maximum of twelve years), including an appropriate grace period. The loans, which are priced in accordance with international market conditions, are usually variable in rate and based on LIBOR. In certain cases, the IIC may provide convertible, subordinated, or participated loans.
The IIC also makes equity investments of up to 33 percent of the investee company's capital. At the end of the investment period, the IIC sells its shareholding. Possible exit mechanisms include sale on the local stock market, private placement with interested third parties, and sale to the project sponsors under a prenegotiated share purchase agreement.
During the year 2000, the Corporation received 626 funding requests; 420 were not considered because they did not meet basic IIC criteria regarding size, additionality, or perceived risk, among others. Two hundred six proposals were considered at an initial stage. As a result, nineteen transactions were submitted for consideration and approval by the Board of Executive Directors.
Fourteen of the operations described below include loans totaling $107.2 million; six include equity investments totaling $35.5 million. This year's two cofinanced loans will mobilize an additional $30 million in funding, and the five investment funds in which the IIC acquired an equity participation will further leverage the resources available for the region's small and medium-size companies. The total cost of the projects financed as a result of the operations approved by the IIC in 2000 is $1.3 billion.
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