New York, January 21, 2020
J.P. Morgan (NYSE: JPM) today announced the creation of the J.P. Morgan Development Finance Institution (DFI) to expand its development-oriented financing activities in emerging markets. In consultation with leading development institutions, J.P. Morgan has created rules-based criteria to help identify business activities and opportunities that generate both financial and developmental returns.
“By defining eligible transactions and anticipating their impact, we can help attract much-needed private investment to developing countries,” said Daniel Pinto, Co-President of JPMorgan Chase and CEO of the Corporate & Investment Bank. “Our aim is to increase engagement with clients and investors interested in financing critical projects and transactions in emerging markets.”
Leading J.P. Morgan’s new effort is Faheen Allibhoy, a seasoned manager and investment professional with deep experience in emerging markets and development finance. Allibhoy, who will be based in New York, had an 18-year career at the International Finance Corporation, most recently as Country Manager responsible for operations and client relationships in West Africa. Daniel Zelikow, Global Head of J.P. Morgan’s Public Sector Group and Co-Head of the Infrastructure Finance and Advisory practice, will chair the DFI’s governing board.
“It’s an honor and privilege to join J.P. Morgan’s DFI,” said Allibhoy. “J.P. Morgan’s global scale, expertise, and suite of financing capabilities provide an excellent platform to make a real difference in emerging markets.”
The United Nations estimates that achieving the Sustainable Development Goals – which seek to address basic infrastructure, food security, climate change, health, and education – by 2030 will require $5 to $7 trillion per year, with an annual investment gap of about $2.5 trillion in developing countries. By galvanizing private capital towards this ambition, the J.P. Morgan DFI aims to help narrow the funding gap.
With its newly-launched Development Finance Institution, J.P. Morgan expects to attract additional investment into emerging economies – including connecting philanthropic or concessional funds with private capital to spur investment through blended finance models. In 2019 alone, J.P. Morgan served clients in 82 of the 144 World Bank-eligible borrowing countries. The DFI estimates that J.P. Morgan will be able to finance development activities valued at more than $100 billion annually from investment banking transactions alone, with additional contributions from its markets businesses. The J.P. Morgan DFI intends to work with existing clients, both governments and those in the private sector, as well as prospective clients across the capital markets.
J.P. Morgan’s Corporate & Investment Bank is a global leader across banking, markets and investor services. Many of the world’s largest corporations, governments and institutions entrust us with their business in more than 100 countries. With more than $26 trillion of assets under custody and $485 billion in deposits, the Corporate & Investment Bank provides strategic advice, raises capital, manages risk and extends liquidity in markets around the world. Further information about J.P. Morgan is available at www.jpmorgan.com.
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J.P. Morgan’s Infrastructure Finance and Advisory Group led the financing for construction of the Rumichaca Highway and Bridge to respond to an infrastructure challenge typically addressed by Colombia’s domestic capital markets. Part of a nationwide $30 billion infrastructure initiative, the project, which is expected to be completed by 2022, has created ~2,000 jobs and enhanced the country’s transportation network.
Looking to strengthen ties between impact investors and global capital markets, J.P. Morgan worked with Swiss impact investor responsAbility to increase lending to entrepreneurs in developing countries. The $175 million securitization of loans will enable 26 microfinance organizations across 17 developing countries to boost lending to 30,000 small businesses and 5.6 million microfinance borrowers – most of whom are women – who do not have access to traditional banking providers. The first securitization of its kind since the financial crisis, this deal opened up the development finance market to mainstream investors.
J.P. Morgan acted as the mandated lead arranger and bookrunner for the project financing to build Phase 1 of the 250MW Syvash wind farm in Ukraine. The financing will fund the first phase of construction including 133MW of grid-tied generation capacity (34 turbines) and the substation, located in the Kherson region in the south of Ukraine. Syvash is the first internationally financed large-scale wind farm in the Ukraine and is expected to become the country’s largest renewable energy project upon completion.
J.P. Morgan delivered a unique structure to refinance a swap for a state-owned public power utility in Sub-Saharan Africa. The refinancing of the swap reduced the enterprise’s cost by ~110bps while reducing its liability in the case of a credit event. The solution required complex structuring, overlaying a contingent CDS with the currency swap and is a first-of a-kind structure that can be replicated in multiple emerging markets.
J.P. Morgan underwrote a series of offshore Indian rupee ('Masala') bonds for the IFC. J.P. Morgan created an innovative swap-hedging structure to meet IFC’s investment objective and priced the issue at an attractive level for diverse investors. The transaction helped attract foreign investors to the off-shore Indian Rupee market and provided an alternative source of local financing for investment in the country.
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