Introducing In3’s Capital Guarantee Program™
In3’s Capital Guarantee Program™ (CGP), the preferred path for funding mid-market projects at any stage, delivers the benefits and advantages of streamlined, fast and affordable capital, without compromising the offer by taking a controlling financial interest, even when developers are seeking 100% financing. In3 manages a type of “committed capital” from a private, global, family office investor based in the US, and although not suitable for every situation, it is likely the fastest, most affordable and reliable source of capital available for qualified projects in the countries where we work.
Few to zero project investors offer developers certainty or predictable terms and conditions for placing their capital. We do. Here’s why and how.
Through its “Next Gen” Guarantee Program, In3 Capital aims to:
- Mobilize private investment (equity and debt) for strategic projects or sector support — we give preference to these 30 sectors.
- Reduce costs and improve financing terms (capital becomes more affordable, provided more quickly and reliably, and for longer loan periods) for project developers, their sponsors, service providers, and governments
- Greatly accelerate the speed at which impact projects come online while ensuring the long-term sustainability of such projects.
- Build a diverse portfolio of long-term projects, without a pre-determined calendar date to divest or sunset the assets, like most funds require. The available capital is not organized as a fund. It is a finance facility.
- Mitigate key stakeholder risks to enable long-term financial viability and sustainable value, including positive social and environmental benefits. Such projects often change lives!
- Set a high bar for other investors to offer comparable terms. Presently, we have no peers … only China-based investors would finance 100% of similar projects, for which they usually expect a majority stake, with a reputation for outmaneuvering developers to eventually take control.
- Enhance the credit of those who would otherwise not be able to finance projects affordably, or at all, especially when they wish to maintain a controlling equity interest.
Main Features
Loan guarantees enable balanced risk allocation from private-sector project developers to banks (via a Bank Guarantee) or between private investors working in cooperation or partnership with governments (via a Sovereign Guarantee) on projects that benefit the country.
Such loan guarantees are suitable for project financing, corporate financing, and can take the place of project, corporate or sovereign-issued completion bonds.
The guarantee stays in place during the project construction phase, until Commercial Operation Date (COD), to ensure that the assets get built and commissioned.
What makes this unique or at least advantageous? See benefits below.
In3’s capital partners are flexible and adaptable to multiple project types and phases, as well as contractual structures
- – Tenors may extend to up to 12-20 years or more
- – Capital costs are a low 3% APR fixed
- – When necessary, developers may involve In3 or their partners in EPC services, as the owner’s engineer, as a general contractor (responsible for building the project assets, usually delegated to a local construction firm), operations & maintenance, for technical services, business planning, deal packaging, pre-vetting (due diligence preparation), putting together datarooms, etc.
Additional risk insurance can be obtained for a variety of hazards, though with a loan guarantee, such insurance may not be required. Examples:
- Contractual risk e.g. payment risk, performance risk, etc. — with CGP, the project would be fully funded.
- Political, Currency and Regulatory risk e.g. change in law, negation or cancellation of license, tariff adjustments, local currency convertibility, transferability, or expropriation, war and civil disturbance, etc. We do not require such insurance, but you may still want to obtain such coverage.
- Performance risk (or volumetric/generation risk) or Completion risk — again, developers may want to ask their EPC/General contractor to cover these hazards, but we do not require such insurance.
Similar to a completion bond, however, our Capital Guarantee Program provides a strong incentive to work together in a cooperative manner to make sure the project assets ultimately get finished and commissioned.
In general, traditional loan guarantees enhance the creditworthiness of the developer/borrower and provide direct return-on-investment in time and effort, inclusive of any fees, by offering far more flexible and attractive terms and conditions. Here we only ask for such a guarantee during construction … then they are allowed to expire upon Commercial Operation Date (COD).
Further, the completed project assets are unencumbered by Senior Debt liens (we do not use a traditional capital stack) enabling the developer to use their completed assets as collateral for subsequent loans.
Benefits of In3’s Capital Guarantee Program for developers and their stakeholders:
- Improvement of the overall credit quality of the investment through the use of a SWIFT guarantee instrument to mitigate credit risks, which qualifies the asset owners for better terms, such as either lower interest rates, or keeping a higher percentage of equity ownership, or both
- Saves significant money over non-guaranteed loans — can be fixed at 3% annual interest, up to 3 or 4 years principal deferred (interest only), with no penalty for early repayment.
- Saves significant time/effort/energy shopping for the best terms, only to later discover there’s a catch. Here there is no catch — we disclose everything up front, clearly distinguishing between all the pre-negotiated terms we offer, and what remains to be negotiated, which mostly just the equity split. We hear that we offer the best terms available anywhere for 100% and/or early-stage financing of mid-market projects.
- Reduction or elimination of key risk drivers which are beyond the control of private investors — including the most important one, the risk of not being able to raise the capital necessary to finance the project(s).
- Immediate project bankability, sustainability, and replicability.
As we enter our 25th year, In3 Capital Group’s track record as a provider of financial services demonstrates that our involvement is a key success factor. Through mobilization of private financing and mitigation of credit risks for impact projects, CGP supports sustainable economic growth and with scale and volume of completed projects on the rise, may eventually begin to mitigate and then reverse climate change, helping countless people and their families thrive in the face of such adversity.
In other words, this program, through your projects and the positive social and environmental impacts they have, achieves twin goals of poverty reduction, improved health & security, and ecosystem restoration for all.
Register your project here to take next steps
by Daniel
Posted on August 7, 2019
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http://www.in3finance.com/introducing-in3s-guaranteed-investment-program/
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