Overseas Private Investment Corpora1on

Transcription

1 Overseas Private Investment Corpora1on SME Financing in Turkey: Exploring Access to Capital American- Turkish Council 34 th Annual Conference on U.S.- Turkey RelaCons Washington, DC William Pegues Director, Structured Finance September 28, 2015

2 Summary OPIC is the Development Finance InsCtuCon (DFI) of the U.S. Government. We lend, place debt with fund managers, and extend policcal risk insurance to projects in lower- income emerging markets. OPIC has been accve in SME financing in Turkey, parccularly via targeted facilices extended through local banks. SMEs have structural challenges in securing financing. Gap exists between evolucon of SMEs as borrowers and what lenders can do to reach them. Technology, educacon, and outreach are improving SME lending prospects in Turkey. The U.S. Government s Development Finance InsCtuCon 2

3 OPIC Solu1ons Products Current Por:olio* Investment Finance Limited recourse, long- term finance for private sector, commercial projects Loan amounts up to $250M per project Specific programs for providing finance to SMEs $18 $16 $14 $18.0 Billion $3.1 Poli1cal Risk Insurance Poli1cal Risk Insurance ProtecCon against currency inconvercbility, expropriacon and policcal violence, including terrorism, as well as other specialized coverage Policy coverage up to $250M per project and 20 year term Fixed premium, cancellable only by insured $12 $10 $8 $6 $2.0 $12.9 Investment Funds Investment Finance Investment Funds Senior debt for private equity funds selected by compeccve process Investment decisions made independently by selected fund managers Provide up to $250M with bullet repayment, zero coupon structure $4 $2 $- *As of September 30, 2014 Total Exposure The U.S. Government s Development Finance InsCtuCon 3

4 OPIC General Requirements OPIC has certain threshold issues for projects that receive any financing or insurance Private Sector Projects ü We do not work Government to Government ü Private sector key parccipacon essencal OPIC does not compete with private sector financial insctucons Each project must receive approvals for: ü Worker Rights ü U.S. Effects ü Human Rights ü Environmental Standards Each project is scored for its developmental impacts and monitored for development and financial returns Each project requires an appropriate U.S. conneccon (nexus) The U.S. Government s Development Finance InsCtuCon 4

5 OPIC s SME Lending in Turkey OPIC has extended more than $4 billion of loans and insurance policies to more than 100 projects in Turkey since In financial services sector 25 loan facilices and more than $1.5 billion. Nearly $1 billion for SMEs. OPIC has lent more than $700 million since 2009 to SMEs in Turkey. FaciliCes extended through major Turkish banks $100 million supporcng more than 9,000 loans to date 2012 $400 million focusing in part on women- run SMEs 2014 $220 million The U.S. Government s Development Finance InsCtuCon 5

6 SME Structural Lending Challenges SME banking is rela1onship banking. Rela1onships are about informa1on. ~ 3mm SMEs in Turkey. Only ~ 25% are companies having broad access to capital. Remainder are sole proprietors. Central SME constraints: Access to finance / managing cash flow Human capital CompeCCveness in market It s difficult to lend to sole proprietors. No real alternacves to banks exist for most SMEs in Turkey. SME stock market capitalizacon very small. Most SMEs use working capital to manage their business. Bankruptcy rate within three years of startup is very high. Lack of available informacon makes assessing creditworthiness difficult. The U.S. Government s Development Finance InsCtuCon 6

7 SME Structural Lending Challenges SME banking is rela1onship banking. Rela1onships are about informa1on. Obstacles to capitalizacon (including borrowing): Transparency in accounts and networks of relaconships conveying informacon Collateral in a form that has value to lenders Financial literacy and professionalizacon of personnel and management No real alternacves to banks exist for most SMEs. SMEs will become less risky by increasing their abilices to manage themselves professionally and transparently. Widening the circle of trust in which they operate and fund Banks will be able to increase lending through outreach and market developments that increase informacon available and SME capacices. The U.S. Government s Development Finance InsCtuCon 7

8 Outlook for SME Funding Alterna1ves Turkish banking sector is deep, innova1ve, technologically adept, and compe11ve. Peer lending, crowdfunding aren t yet viable. Angel investor pool of capital for high- tech startups isn t deep; relaconships are important for access. Venture capital sector developing slowly. Fin Tech companies use technological innovacon in financial services Provide window into business performance if SME uses e- commerce Disruptors or facilitators? Can funccon as intermediaries making borrowers more transparent. PotenCal for collaboracon with banks. Increasing SME financial literacy and financial transparency Financial educacon outreach via banks. Digital plasorms. Younger, tech- savvy generacon of SME proprietors. Banks becoming beuer at communicacng in language of SMEs. The U.S. Government s Development Finance InsCtuCon 8

9 Thank You OPIC Contact Informa1on: Overseas Private Investment CorporaCon 1100 New York Avenue, N.W. Washington, D.C U.S.A. Tel: +1 (202) The U.S. Government s Development Finance InsCtuCon 9

10 Overseas Private Investment Corpora1on SME Financing in Turkey: Exploring Access to Capital American- Turkish Council 34 th Annual Conference on U.S.- Turkey RelaCons Washington, DC William Pegues Director, Structured Finance September 28, 2015