41700 - TCX II

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Summary of Investment Information

Project Number

41700

Company Name

THE CURRENCY EXCHANGE FUND N.V.

Date SPI Disclosed

Jun 22, 2020

Country

World Region

Region

Global

Projected Board Date

Jul 24, 2020

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Aug 6, 2021

Department

Products Clients and Innovation

Industry

Funds

Previous Events

Approved : Aug 27, 2020
Signed : Oct 30, 2020
Invested : Nov 6, 2020

Sector

Other Non-Private Equity Fund

Additional Project Attributes

Blended Finance

Project Description

The proposed project is a joint equity investment of US$50mn by IFC and IDA in TCX, a fund established in 2008 by a group of Development Finance Institutions and specialized micro-finance vehicles to offer products to manage currency risk in emerging markets and developing economies (EMDE). IFC will invest US$10 million for its own account and a further US$40 million on behalf of IDA under the Private Sector Window Blended Finance Facility. IFC is an existing investee in TCX with a 4.46% shareholding as at December 31st 2019. The proposed investment will increase TCXs capacity to offer currency risk management products in IDA countries and consequently enable offshore investors including DFI to provide local currency financing in those countries on competitive terms. IFC as a shareholder will benefit from member-pricing which will enable IFC to provide more local currency financing in IDA countries where hedging solutions may otherwise not be available

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	50.0

Development Impact

Project impact: The most significant expected Project-level outcome is the increased availability of currency risk management instruments that will facilitate increased local currency capital flows into IDA PSW countries. Market creation: The project will contribute to stronger integration and the deepening of financial markets of IDA PSW countries primarily by creating relevant pricing benchmarks that are critical building blocks for the efficient allocation of financial resources. TCX will also help provide capacity building for stakeholders in IDA countries. IFC expects that increased scope for longer-term local currency financing will boost competitiveness in markets benefiting from expanded TCX hedging, encouraging other investors to replicate TCX's hedging activities by demonstrating their effectiveness and commercial potential.

IFC's Own Account Equity: IFC and IDA will by this project provide TCX with growth equity needed to support the growing need for local currency financing in emerging and frontier markets and in particular IDA countries. Without the IFC and IDA equity investment, TCX will face capital constraints that will limit the Fund's capacity to provide hedging products and may prevent the Fund from meeting its clients' needs and achieving its anticipated growth. The capital constraints consequently would limit the flow of local currency financing into IDA PSW countries, where TCX is often the only counterpart providing hedging solutions for long-term financing.

E&S Category Rationale / Risks and Mitigation

This project consists of an equity investment of $50 million in a currency exchange fund (“TCX”) that provides exclusively local currency and interest rate hedging in emerging and frontier market currencies. The Fund’s transactions are purely financial in nature and do not involve any new asset creation or direct support to specific activities. As hedging services provided by the Fund entail minimal E&S risks and impacts, the project is classified as a Category FI-3 in accordance with the IFC Sustainability Framework. Under this project the Fund will continue to apply its policy of requiring the counterparties it works with to have E&S policies to manage the E&S risks of their operations. The Fund will be required to inform IFC in the case of any change in the nature of its operations.

Given the E&S risk nature of this project, development of a robust ESMS was not needed.

Contacts

For Inquiries About the Project, Contact

TCX Fund
Ruurd Brouwer
CEO of TIM
+31 6 225 631 86
r.brouwer@tcxfund.com
The Netherlands
Websitewww.tcxfund.com

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Fax: 202-974-4384

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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Online form: available at https://www.cao-ombudsman.org/
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Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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