InfraZamin Pakistan, a licenced NBFI and credit guarantee provider and Kashf Foundation a Section 42 company and licensed microfinance institution have signed an agreement to bring Pakistan’s first “Gender Bond” to institutional capital market investors. The “Gender Bond” is a subsequently listed privately placed term finance certificate whose proceeds will go towards enhancing Kashf’s portfolio towards lending exclusively to women to develop micro-infrastructure which includes rural area school construction, flood rehabilitation of damaged homes and expansion of women-led micro businesses. As such the Gender Bond fully subscribes to the Guidelines of Gender Bond issuance by Securities and Exchange Commission of Pakistan (SECP) which are based on the UN Sustainable Development Goals and UN Women’s principles for women empowerment. Arif Habib Capital serves as the ‘Arranger’ for this bond.
This 3-year Gender Bond will raise PKR 2.5 billion under an initial private placement and subsequent OTC listing to capital market investors thereby making it eligible for a large number of capital market participants. The bond carries an InfraZamin credit guarantee of 100% of the principle amount of the bond and partial guarantee for the interest instalments. The Bond is credit rated ‘AAA’ long term and ‘A1+’ by PACRA and attractively priced at 3-month Kibor + 1.50pc spread. The InfraZamin guarantee is irrevocable and unconditional which means that in the event of any credit event InfraZamin will pay all amounts as covered by the guarantee facility.
This first-of-its-kind Gender Bond will allocate all of its proceeds via Kashf’s microfinance lending portfolio to exclusively support ~30,000 women from low-income households to develop micro- infrastructure. Kashf Foundation has a rich 25 year history of supporting women and women led businesses from its microfinance platform and has over 700,000 active women clients. Since its inception Kashf has disbursed over 6.6 million loans to women micro-entrepreneurs. Bond proceeds are expected to boost Kashf’s balance sheet and provide much needed commercial capital to women from an underprivileged stratum to pursue entrepreneurial aspirations, rehabilitate homes and expand schools and small businesses. Such lending will help women achieve financial independence, develop financial capacity and contribute towards Pakistan’s economic growth and productivity.
This first-ever Gender Bond will not only foster inclusivity and diversity but also contribute to the development of the bond capital markets. InfraZamin’s 100% principle guarantee and partial interest guarantee provides complete comfort and protection to investors against default/credit risk and will play a vital role in crowding in private institutional investor capital to augment Kashf Foundation’s balance sheet.
Recent SECP amendments have also facilitated this risk mitigation by allowing 85% exemption to NBFC’s for exposures against InfraZamin’s guarantees (similar to the State Bank of Pakistan’s exposure exemptions to commercial banks) along with other areas of support for mutual funds as well.
Commenting on the occasion, Maheen Rahman, CEO – InfraZamin Pakistan, said, “We are excited to the part of the first Gender Bond transaction in Pakistan and grateful to Kashf Foundation for their pioneering vision towards their long history of enabling women empowerment. As a country which sits near the bottom of the Gender Equity Index this transaction marks a significant leap forward in raising commercial capital directed to female empowerment and financial inclusion and represents an important milestone in the development and growth of the capital market. This transaction also demonstrates the power of using guarantees and credit enhancement facilities to enable a crowding in of private institutional investment into private sector led projects.
Commenting on the occasion, Roshaneh Zafar, Managing Director – Kashf Foundation, said, “Collaboration between Kashf Foundation and InfraZamin will not only be a significant leap forward for the financial sector but will also accelerate the process of creating financial opportunities for women entrepreneurs by introducing the first-ever Gender Bond in the capital market of Pakistan. Expanding access to affordable finance for more women-led businesses will create employment opportunities and fuel sustainable economic growth in the country. It is hoped this initiative will encourage other organizations and stakeholders to prioritize the economic potential and aspirations of women. This transaction will open up new avenues of investors for the microfinance sector particularly the Non profit MFIs. Kashf Foundation is hoping to work with diverse universe of investors and providing them with the opportunities to indirectly support the agenda of Financial Inclusion in the country.”
Commenting on the occasion, CEO Arif Habib Limited, Mr. Shahid Ali Habib stated: “ Arif Habib Limited is pleased to launch the first of its kind AAA Rated ‘Gender Bond’ in Pakistan being issued by Kashf Foundation and fully guaranteed by InfraZamin. The proceeds will be utilized for economic empowerment and financial inclusion of women in Pakistan which is essential for Pakistan’s sustainable development. We are delighted that InfraZamin Pakistan is taking the lead in promoting private sector infrastructure projects and is acting as a Guarantor providing complete risk protection to bondholders of Kashf Foundation. “
Kashf Foundation, InfraZamin Pakistan and Arif Habib Limited are grateful to the support and facilitation extended to them by the Securities Exchange Commission of Pakistan (SECP) to enable the launch of this new product for Pakistan’s bond markets.
The Gender Bond has already been launched in marketing phase and hopes to complete the subscription by July subject to all requisite approvals from the SECP.
InfraZamin Pakistan, a AAA credit rated firm, is deeply committed to supporting the infrastructure development of Pakistan through private-sector engagement. With a strong focus on sustainable development, InfraZamin collaborates with public and private stakeholders to unlock investment opportunities, mitigate credit risks, and mobilize capital for crucial infrastructure initiatives. By leveraging its expertise and partnerships, InfraZamin aims to contribute significantly to the nation’s infrastructure development agenda and pave the way for a prosperous and resilient future. InfraZamin Pakistan is funded by the Private Infrastructure Development Group (PIDG) through InfraCo Asia and GuarantCo, in partnership with Karandaaz Pakistan.
Kashf Foundation is a leading gender-intentional, pro-poor, and client-responsive organization with over 25 years of experience in empowering women through financial services. As the pioneer of women-led microfinance in Pakistan, Kashf Foundation has led a transformative movement that has empowered millions of women from low-income households. By continuously offering innovative and impactful products and services, Kashf is at the forefront of the mainstreaming efforts to uplift women and promote gender equality.
Arif Habib Limited (“AHL”) is a leading investment banking, securities brokerage and economic research firm; having been recognized as the Country’s best in the latest awards by the CFA Society of Pakistan and Asia Money. AHL is amongst the most active investment banking firms in Pakistan and is currently advising on various transactions such as Mergers & Acquisitions (“M&As”), Initial Public Offerings (“IPOs”), Term Finance Certificates, Sukuks, Securitizations, Real Estate Investment Trust (“REIT”), Private Equity placements. AHL’s brokerage operations are among the most renowned and trusted in Pakistan assisting scores of Institutional, Corporate, High Net Worth and Retail clients. AHL is the only non-banking financial institution out of over 600 listed companies that found its place in the “Top 25 Companies of Pakistan” voted by the Pakistan Stock Exchange.