KARACHI: The country’s first financing guarantee facility specifically for infrastructure projects has been launched under the name of InfraZamin.

A press release issued by the company on Monday said it is a for-profit credit enhancement facility. On Monday, InfraCo Asia, via its subsidiary Indus Guarantees Pvt Ltd, and Karandaaz held a signing ceremony in Islamabad for the shareholders agreement, setting into motion the operationalisation of the facility, the statement released by the company said.

Talking to Dawn on the phone, Karandaz CEO Ali Sarfaraz said the facility aims to provide credit enhancement guarantees to sponsors of infrastructure projects that will enable them to get long-term financing from financial institutions with a tenor of 10 to 15 years at rates lower than what they would get without the backing of a guarantee.

“The average ticket size of the guarantee extended to ongoing projects would be roughly around Rs5 billion initially,” he says while adding that projects could get guarantees ranging from Rs3.3bn to Rs6bn.

He says the facility will try to aim at projects such as those who wish to build private hostels for college going youth, alternate energy projects like wind and solar, roads and hospitals. “The gold standard for us will be social infrastructure.”

“The best clients for us would be private sector entities who don’t have access to private commercial capital or development capital” he says.

The facility is funded by equity from InfraCo Asia Investments and Karandaaz Pakistan, which is provided by the United Kingdom’s Foreign, Commonwealth and Development Office, which has put up $100 million for the facility according to Ali.

He is optimistic the banks will view a project backed by an InfraZamin guarantee because of the presence of GuarantCo, which has provided ‘tens of millions of dollars’ to finance the contingent capital facility, in case of project failure.

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Published in Dawn, November 10th, 2020