It may not be the sort of lead arranging mandate Deutsche Bank normally undertakes, but it’s for a very good cause.
Deutsche and a number of other banks, corporates, agencies and investors last month launched a $75 million global commercial microfinance consortium to provide local currency finance to entrepreneurs such as street vendors, traders and farmers throughout the developing world.
Deutsche Bank brought the consortium together, acting as lead arranger and managing the sale of the fund. The fund includes three tranches of debt and one of equity, with the US Agency for International Development (USAid) providing a $15 million credit guarantee. The five-year floating rate notes pay investors Libor plus 125bp.
The idea is to give investors a commercial rate of return, while pooling resources allows the fund to be a lot larger than any institution could raise on its own. Deutsche Bank hopes this will lead to other, even bigger, funds being raised.
The fund fulfils a $50 million commitment made by Deutsche Bank to the Clinton Global Initiative, which brings together corporations, non-profits, religious institutions and governments to make specific pledges to address issues such as global poverty and climate change.
Former US president Bill Clinton, who spoke at the launch of the consortium in New York, said this was the first example of a commitment received at the initiative’s annual summit in September actually being met. “I will use this as an example to beat the living daylights out of everyone who has made a commitment and not fulfilled it,” he joked.