InfraZamin Pakistan (IZP) is a special infrastructure development firm, organized as a non-banking financial business, authorized by the SECP and acknowledged by the State Bank of Pakistan. Our main goal is to offer credit-enhancement and credit-guarantee services for infrastructure project debt financing. We place a strong emphasis on initiatives that will help achieve the United Nations Sustainable Development Goals and initiatives that have historically been underbanked in Pakistan.
IZP derives its parentage and experience from a unique multilateral, the Private Infrastructure Development Group (PIDG), which is funded by six European governments, the UK, and other international DFIs to facilitate and fund infrastructure projects in developing countries. Approximately 220 million people now have access to better infrastructure thanks to the PIDG’s funding of over US$38 billion in infrastructure projects across Asia and Africa.
IZP reduces or eliminates the credit risk of a project by underwriting the borrower’s debt repayment obligations. This provides acceptable collateral to banks or other institutional investors, can bring down lending rates, and increase the overall tenor of the loan all of which improve a project’s overall commercial return.
IZP guarantee is typically accepted by all local banks, and for this purpose amendments have been made by the State Bank of Pakistan relevant regulations recognizing IZP guarantee as an acceptable credit enhancement facility. Other than the banks, institutional investors and capital market investors can also accept the IZP guarantee in case of making investments in bond issues backed by IZP guarantees.
This agreement is a tripartite one including IZP, the borrower, and the banks. The paperwork, however, centers on the borrower.
Both qualitative and quantitative characteristics are present. There must be a discernible influence on development, including but not restricted to bettering access to healthcare, education, empowering women, and reducing poverty. International health and safety standards as well as environmental standards should be followed by the project. The project must be economically feasible and fulfil a number of key financial criteria, such as debt to equity and debt coverage etc.
We can cover between 50% to 100% of the debt repayment risk.
With IZP guarantee borrowers can get better terms with respect to rates, tenor, and value as the bank’s risk of non-repayment is hedged via the guarantee thereby reducing credit risk.
Only for projects where government approvals are a pre-requisite otherwise there is no particular requirement.
Facility from IZP can be availed anytime during the financing process and at any point of the loan tenor.
At the moment we are targeting projects over PKR 1.5bn in terms of guarantee requirements but we can evaluate smaller projects depending on the development impact. We also have the ability to expand our size via collaborations with our group companies in particular GuarantCo and InfraCo Asia.
We target a four to six-month staged approval process; however much depends on the readiness of the borrower in terms of their own plans and how advanced their prep work may be in providing the necessary information for evaluation.
Key areas of interest for IZP are renewable energy, water and sanitation, electricity generation and distribution, digital communication and infrastructure, health and education, financial sector, agriculture, and transport infrastructure.
InfraZamin charges a guarantee commission on the guarantees it issues. This amount varies based on the type of borrower and the type of risk that is being mitigated. In general, the commission is not expected to be a large cost of funding for the borrower as that defeats the purpose of developing the financing market.