Country Development Corporation
Bond Asian Ventures (BAV) typically has a de minimis of $100m for investments. This makes our process unsuitable for investments into individual SMEs and small scale government projects. To overcome this difficulty and gain exposure to such projects, we have therefore developed the Country Development Corporation model.
The process is as follows:
BAV and its introducers identifies a single counter party in the target country. The counter party could be a government ministry, a bank, or other legal entity of significant size.
Informal discussions take place between BAV and the counter party to agree:
• The size of the development fund;
• Key sectors/projects into which the fund will invest;
• The acceptable parameters for the interest rate coupon and/or return on investment;
• The required size of the counter party’s bank guarantee (or alternative security, see BAV De Risking Models - Summary).
BAV issues a high level offer letter to the counter party’s decision maker, which the decision maker must sign and return to BAV in order to formally and directly engage.
The decision maker must meet with BAV’s principals and attorneys at their offices in London to agree the detailed terms of the fund.
BAV’s attorneys will prepare the conditional binding term sheet, which must be approved by the country party’s attorneys and signed by both parties.
BAV will establish a special purpose vehicle (SPV) for the project in London or Switzerland, and open an account with a high rated international bank.
The counter party will instruct its bank to issue a BG (through its correspondent international bank) to the SPV account. Receipt of the BG will trigger the conditional binding term sheet to become a binding term sheet.
BAV will issue an investment memorandum (IM) to its investor panel and convert pledges into liquid funds, which are deposited into the SPV account.
BAV will establish a project SPV (SPV2) and corresponding bank account in the country. The SPV will have a board of directors drawn from both BAV and the counter party.
Funds will be drawn down from the main SPV account into the SPV2 account in accordance with the agreed drawdown schedule.
SPV2 will invest debt and/or equity from its account in suitable projects identified and approved by SPV2’s board of directors.