OVERVIEW
The Eastern Caribbean Central Bank (ECCB) plans to establish
the ECEF as a part of its commitment to foster and strengthen
development of the private sector in the Eastern Caribbean
Currency Union (ECCU). The private sector contributes to over
70% to the GDP of the eight ECCU countries. The ECEF will
source funding for business skills training and technical
assistance. It will also offer growth financing to augment
and supplement the services currently provided by various
financial institutions.
The ECEF would be established as a limited liability company
(LLC) with an initial authorised capitalization of EC$50M
and a first subscription of EC$10 million through private
placement to regional and international institutions. Three
classes of shares would be offered. Class A shares would be
allotted to the ECCB; Class B shares to the Social Security Systems and other public sector institutions, and Class C
shares to financial institutions.
The ECEF will be governed by a Board of Directors to be elected
from nominations by the three shareholder classes. Each class
will be entitled to nominate one (1) director for every ten
percent (10%) of the equity capital held, up to a maximum
of three (3) directors.
Target market
The ECEF’s target market will be private sector companies
in the productive and service sectors with clear potential
to generate foreign exchange earnings and employment. Financing
will be provided for expansion and diversification from early
stage to second round financing. Financing may be in the form
of equity, quasi equity or debt. Ideally, the financing and
other support to SMEs would facilitate the disposition of
investment within ten years through buy-back by owners and
sale to a third party or public listing on the ECSE.
In all cases the ECEF will collaborate with the company’s
bank(s) and shareholders to provide the most practical growth
financing, tailored to case-by-case requirements. To mitigate
risk the ECEF will not invest more than 25% of its total capital
in any one company. Financing may be provided directly or,
more commonly through co-financing or syndication with qualified
financial institutions and/or private investors.
To promote entrepreneurship the ECEF will take only a minority
equity stake (less than 50%) in each company. The ECEF will
not actively participate in the management of portfolio/investee
companies but will add value through board and committee participation
and the sourcing of requisite training and/or technical assistance.
Acceptance of technical assistance will be a pre-condition
of the financing agreement.
It is proposed that the ECCB’s Export Credit Guarantee
Scheme (ECGS) will be enhanced and brought under the ECEF.
The Export Credit Guarantee Scheme will guarantee 80% of the
risk to financial institutions that provide working capital
to ECCU exporters. There will be two Schemes: A Pre-Shipment
(bridge) Financing Scheme (PSFS) and a Post-Shipment (factoring)
Guarantee Scheme (PSGS).
top ^
|
The Eastern Caribbean Enterprise Fund