| Company | InfraZamin Pakistan |
| Sector | Multi-sector |
| Country | Pakistan |
| PIDG Commitment |
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| Dates of PIDG involvement |
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Pakistan has significant unmet need for long-term local currency financing for infrastructure projects. Pakistan’s financial system is characterised by low levels of financial participation and development – generally, only the largest corporate groups have access to formal finance channels. The banking sector controls over 75 per cent of all financial assets, and the top 20 corporate borrowers are estimated to account for 30 per cent of all lending in Pakistan and 50 per cent of total corporate lending. Furthermore, Pakistan’s six largest banks dominate over 50 per cent of the banking market.
There are smaller pockets of liquidity represented by insurance companies, pension funds, DFIs, mutual funds and the National Savings Scheme. These sectors are relatively untapped and have potential to become meaningful investors in long-term credit enhanced debt instruments.
InfraZamin Pakistan will issue credit guarantees for greenfield and brownfield infrastructure-related debt instruments based on the company’s ‘AAA’ long-term rating (by PACRA) and attract private capital investors who would otherwise not participate in lending to infrastructure-related sectors in Pakistan.
Through the equity investment and contingent capital facility provided by PIDG – which can be leveraged up to 10 times – InfraZamin can bridge the financial infrastructure gap in Pakistan to encourage the crowding-in of underused pockets of liquidity, to fund sustainable and transformational projects in the country.
The local credit enhancement facility will support increasing local investors and financial institutions’ participation in infrastructure projects by offering credit guarantees for complex transactions. These interventions will ultimately increase the flow of finance to infrastructure projects in the country.
