General Information
The Société de Promotion et de Participation pour la Coopération Economique (PROPARCO) is a development finance institution, whose main shareholder is Agence Française de Développement (AFD), the French government-owned development financial institution that is part of France’s foreign aid and contributes to economic and social progress in more than 90 developing and emerging market countries in Africa, the Middle East, South East Asia, the Caribbean, and in the French Overseas Departments and Territories. Other shareholders of PROPARCO include major French private banks and companies, and international African banks. PROPARCO combines both a developmental objective with profit-oriented requirements. The company, whose share capital is €142.6 million, is involved in all manufacturing, infrastructure and service sectors, including financial services.

In 2004, PROPARCO’s geographical coverage was extended to new countries, among which China, Egypt, as well as Thailand and Turkey where representative offices were opened. The rationale behind PROPARCO’s funding may be summarised in four keywords: Long-term involvement, additionality, profitability and innovation.

PROPARCO’s role is not to compete with private players, but to facilitate their involvement in long-term projects. Financial flows associated with the company’s funding must be transparent and compliant with strict French and international laws, and regulations regarding money laundering and protection of the environment.

Instruments

Equity

PROPARCO offers the full spectrum of private equity instruments, whether directly or through funds. The company always remains a minority investor. Portfolio companies include a wide array of industries, markets, company sizes and stages of development.

Core to the philosophy of PROPARCO’s equity investments is the assumption that they must be value-driven by sharing with investors, managers and employees, the risks and rewards of long-term environmentally and socially responsible development. Exiting takes place on average after a 5-7 year period, once portfolio companies can attract new investors or be listed.

A new department specialised in equity was set up in 2004 and is involved in all types of tailor-made solutions in developing and emerging markets in capital investment and development, including cross-border operations and financial engineering, such as LBOs.

Loans

All lending products are available, such as junior or senior corporate and bank lending, as well as mezzanine finance. Loans may be denominated in euros, dollars and other currencies, on a case by case analysis. Their maturities range from 3 top 15 years with an average of 8-10 years. Grace periods may be granted up to one quarter of the final maturity.

Guarantees and risk-mitigating products

Off-balance sheet instruments such as guarantees and credit enhancement mechanisms, whose aim is to promote and leverage private capital flows, have become a key component of PROPARCO’s operations. They allow the mobilisation of long-term resources in local and foreign currencies. PROPARCO thus provides investors with a certainty on their financial return. Securitisation and structured finance vehicles are also a full component of PROPARCO’s range of instruments.