IFC and DEG Agree to Subscribe to Asia Pacific’s First Private-Sector
IFC and DEG Agree to Subscribe to Asia Pacific’s First Private-Sector Women Entrepreneurs Bonds to be Issued by Bank of Ayudhya
published : 23 Aug 2019 at 16:49
Bangkok, Thailand, August 23, 2019—IFC, a member of the World Bank Group, and DEG (Deutsche Investitions und Entwicklungsgesellschaft) have agreed to subscribe the Women Entrepreneurs Bonds to be issued by Bank of Ayudhya in the amount of up to $220 million.
The pioneering investment is supported by the Women Entrepreneurs Opportunity Facility, a joint initiative of IFC and Goldman Sachs 10,000 Women to expand access to capital for women entrepreneurs globally. The aim of this offering is to boost lending to women-led small and medium-sized enterprises (WSMEs) in Thailand.
Bank of Ayudhya, locally known as “Krungsri,” and one of Thailand’s largest universal banks and a leader in retail and SME banking, expects to issue the bonds to IFC and DEG this October. IFC’s and DEG’s subscriptions will be up to $150 million and up to $70 million, respectively. MUFG Securities Asia Limited is the sole social bond structuring advisor, arranger, and placement agent.
This will be the first private-sector “gender” bond issuance in the Asia Pacific region and the first social bond issuance in Asian emerging markets in compliance with the International Capital Markets Association Social Bond Principles and the ASEAN Social Bond Standards.
Seiichiro Akita, Krungsri’s President and CEO, said: “Krungsri holds strong to our conviction in continuing to grow our business, while fulfilling the broader goal of financial inclusion for the underserved, including the WSME segment. This issuance reaffirms our commitment to corporate citizenship practices and our broader ambition to meet the UN Sustainable Development Goals.”
More than half of the SMEs in Thailand, and especially those owned by women, lack adequate access to finance. The finance gap for WSMEs in the country is estimated to be $25 billion, accounting for 61 percent of the overall micro and SME finance gap in Thailand.
Augusto King, Co-Head of Debt Capital Markets Loans and Bonds Asia Pacific at MUFG, added: “Sustainability is an important agenda for MUFG. This issuance will give women entrepreneurs across Thailand the chance to take their businesses to the next level and unleash fresh growth impetus in the country.”
This inaugural certified social bond issuance will help expand credit lines to WSMEs — an important sector that drives economic growth and employment — and promote the transparency and integrity of Asia’s nascent social bond market.
Monika Beck, Member of DEG’s Management Board, underlined: “DEG is proud to partner with Krungsri and IFC for this first private sector gender bond in Thailand. The transaction demonstrates DEG’s commitment to promoting greater participation of women in the Thai economy to raise productivity, boost the living standards of families, and foster social cohesion.”
Social bonds raise funds for projects that help improve social outcomes. This novel asset class provides investors with an attractive investment proposition as well as an opportunity to support projects with positive social impact.
Krungsri’s Women Entrepreneurs Bonds will introduce WSME loans as an attractive asset class for investors and pave the way for the issuance of future capital markets instruments that benefit socially-responsible initiatives in Thailand and the region. Through this offshore bond issuance, Krungsri will position itself as a pioneer of women finance in Thailand.
“We are focused on closing gaps in access to finance and education for women entrepreneurs. That is why we support innovative capital solutions such as the first private-sector “gender” bond in the Asia Pacific region,” said Cristina Shapiro, Global Director of 10,000 Women. “Goldman Sachs research shows that closing the credit gap for women-owned SMEs in emerging markets could push income per capita an average of 12 percent higher by 2030. Women entrepreneurs have real potential to impact Thailand’s future growth.”
Philippe Le Houérou, the Chief Executive Officer of IFC, said: “Our partnership with Krungsri and DEG introduces an important new capital markets tool to Thailand and the region. Instruments like the Women Entrepreneurs Bonds will allow investors to experience what IFC has observed for years; namely, that women entrepreneurs are a source of growth and sustainability for banks, communities, and countries. Investing in women can improve the lives of families and drive business, thereby ensuring Thailand’s growth trajectory is inclusive and sustainable.”