Project detail - FCC Securities B.V.

Who is our prospective customer?

Frontclear is an Amsterdam-based financial markets development company that facilitates access for financial institutions in developing countries to local and global interbank markets through the provision of secured funding and credit guarantees to cover counterparty credit risk. Frontclear is part of Cardano Development – a group focusing on developing innovative financial risk management solutions, also involved in, among others, the TCX and GuarantCo funds. Frontclear’s investors include a number of European development finance institutions, including the European Bank for Reconstruction and Development (EBRD), Proparco, The Currency Exchange Fund (TCX), as well as the UK Department for International Development (DFID, through the Financial Sector Deepening Africa) and German Federal Ministry for Economic Cooperation and Development (BMZ).

What is our funding objective?

The USD 50mln senior loan facility includes a USD 20mln uncommitted tranche. The Funding objective is to add to the product set of Frontclear, by allowing them to fund smaller transactions and add to their existing product suite of guarantee products.

Why do we want to fund this investment?

The investment allows Frontclear to enhance its product suite and customer reach, enabling it to be more efficient and to continue supporting the development of more inclusive and more liquid interbank markets in emerging and frontier economies. Frontclear is a niche-player with a unique proposition that has proven to be scalable. In the ten years of operations, Frontclear has extended its reach to multiple countries across emerging and developing markets. Frontclear’s product offering is also complementary to FMO since it is highly beneficial to many of our financial institution clients: whereas DFIs provide long-term financing, Frontclear offers short-term money market solutions. It will receive 100% Reducing Inequalities label, due to its expected increase in exposure to LDC markets.

What is the Environmental and Social categorization rationale?

Frontclear has been categorized as FI-B, in line with FMO's policy. The categorization reflects the FI's business activity which includes credit guarantees and secured funding for money market instruments to Emerging Markets and Developing Countries' financial institutions (EMDC-FI). As part of the investment, FMO is working with Frontclear to ensure that E&S risk management is tailored to the services it offers and to its E&S risk exposure.