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Message from our CEO, Cesar Cañedo- Argüelles
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In our March newsletter, we told you about some of the initiatives related to debt funds that we are working on this year. To this end, we have strengthened our team, and we are proud to announce that on July 15th Javier Escorriola will join CIFI as Managing Partner of CIFI Asset Management, our investment firm and asset management subsidiary focused on debt financing of private middle-market infrastructure projects in Latin America and the Caribbean.
Javier Escorriola is a business, banking, and finance professional with more than 20 years of experience. With his entry, CIFI incorporates experience, talent, and vision to lead our commitment to diversifying vehicles and products through CIFI Asset Management. This will allow us to continue to be a relevant player in the development of infrastructure in our countries, making the region more competitive and better connected.
Through CIFI Asset Management, we offer institutional investors the possibility to be direct players in project finance and middle-market support, benefiting from CIFI's long-standing lending, advisory, and servicing capabilities to identify structure and finance projects. I invite you to read more about it here in this issue.
I would also like to inform you that we have affirmed our conviction to support the commitment that the G7 Group announced in June through the new Build Back Better World (B3W) partnership.
For the first time, G7 leaders aligned their long- and short-term climate goals to keep the 1.5 degree Celsius global warming threshold within reach and agreed to conserve or protect 30% of the world's land and marine areas by 2030. With CIFI's experience in this field and our strategic vision, we will continue to do our part to facilitate funding for projects that support this commitment.
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Javier Escorriola's signing represents a home run for CIFI.
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Javier Escorriola, current Chairman of the Board of Directors, joins the CIFI team and will be leaving NORFUND, where he currently holds the position of Chief Investment Officer for Latin America. In addition to his 16 years at NORFUND, our largest shareholder, Javier, has been Chairman of CIFI's Credit Committee and has served on our Board of Directors in various capacities, holding the position of Chairman for the past six years.
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As mentioned earlier in this edition, undoubtedly, the incorporation of Javier into the CIFI team is excellent news that confirms the good positioning of CIFI to implement the Strategic Plan successfully.
Javier is a business, banking, and finance professional, who graduated from the University of Texas with degrees in Business Administration and Economics and a Masters in Economics, Banking, and Finance from the University of Sheffield, UK. Throughout his working life, he has held different local and regional responsibilities in service, administrative and managerial areas. His previous jobs and functions in Banco Interfín and Actis gave him valuable knowledge within these sectors in Latin America, Asia, and Africa. In addition, he gained experience in other fields such as energy, insurance, fast-moving consumer goods, agribusiness, real estate, hotels, and alternative investments.
In his career, Javier has belonged to more than 30 boards of directors of different institutions, funds, and projects that have given him a vast horizon of the industry.
It is a pleasure for CIFI to complement the team with his entry as part of the Strategic Plan and the clear commitment to CIFI Asset Management.
Cifi Asset Management: A rapidly growing business unit.
CIFI Asset Management is the business unit that proposes to meet the objectives and needs of clients through credit, advisory, and day-to-day service, aligning our clients' interests with our own to structure and finance middle-market infrastructure projects throughout Latin America and the Caribbean.
CIFI Asset Management is dedicated to identifying investment opportunities that generate attractive returns and appropriate risk for our clients and foster sustainable development in the region.
Through asset management, we provide portfolio management services in infrastructure lending in areas of high population growth and reduce environmental, social, and governance (ESG) risks. These areas of development that can be managed in a conscious, responsible, and sustainable manner with the environment and our planet's resources include industries such as telecommunications, ports, highways, and power generation.
This experience places us as a critical ally and leader in Latin America and the Caribbean in financing responsible development.
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Working with Eco Indef to combat firewood pollution in Chile.
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Indef S.A. requested a US$32,500,000 senior loan from CIFI to refinance and provide working capital for a pellet plant in Chile's Bio-Bio province, the largest pulp and wood-producing region in Chile and the second largest in Latin America after Brazil. The facility is
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already operational and produces 125,000 to 375,000 tons of wood pellets per year from local forestry industry waste.
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CIFI finances a portfolio of solar power plants for Enerside in Chile
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As part of the efforts to contribute positively to the environment, CIFI participates with the Spanish developer Enerside Energy in a project that will help avoid the production of 13,350.25 t CO2 eq/year and reduce the carbon
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footprint by promoting clean and renewable energy sources.
This is a portfolio of solar energy harvesting plants in Chile. The portfolio is at an advanced stage of development, which will allow construction to begin on time and be in good shape during the first half of 2022. The total cost is expected to be nearly US$ 17 MM at the end of all stages.
CIFI executives expressed pride in its growing presence in the Chilean clean energy market.
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CIFI structures a loan to Valfortec to finance ten photovoltaic plants in Chile
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CIFI has structured a senior loan for up to US$22.4 M with a 17-year term to finance the development, construction, and operation of 10 photovoltaic generation plants owned by Valfortec Chile SpA. Within the amount invested, CIFI will initially
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participate with US$ 13.9 M, 62 % of the total loan.
Valfortec has been in the construction business for more than 25 years and entered the photovoltaic sector in the mid-2000s. It operates in Spain, Japan, the United States, the UK, Ireland, and Chile, where more than three years ago, it began construction of its first two plants with a total of 6 MW.
In this regard, Verónica Villacis, ESG Officer at CIFI, said that "the client is very open and willing to learn about the IFC Performance Standards.” Guillermo Sierra, head of CIFI's Investment team, said he was proud to continue supporting large Spanish companies such as Valfortec in structuring and financing their projects in Latin America."
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The ten Valfortec plants financed by CIFI will reduce CO2 eq emissions by 23,555 tons per year and provide access to clean energy to more than 11,800 people in four different regions of Chile.
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On May 16, CIFI and the OPEC Fund for International Development signed a US$25 million loan agreement to finance the development of private sector infrastructure projects in the Latin America and Caribbean (LAC) region.
OPEC Fund Director-General Dr. Abdulhamid Alkhalifa said, "More investment is needed to meet the region's growing infrastructure needs. Our cooperation with CIFI will promote private sector participation in infrastructure development, support medium-sized projects in the energy, water and sanitation, transportation, and telecommunications sectors, and improve the quality of life for citizens throughout the region. This is an important contribution to the Sustainable Development Agenda".
César Cañedo-Argüelles, CEO of CIFI, commented, "CIFI is a long-term player with long-standing relationships with our partners. This new line of credit with the OPEC Fund demonstrates that CIFI and the OPEC Fund are trusted partners working with similar goals and vision to focus on projects that meet basic infrastructure, drive development, strengthen communities and generate well-being in our region. We are proud to team up with the OPEC Fund.
The OPEC Fund and CIFI are united in the ambition to meet the Sustainable Development Goals (SDGs), and the new funding will include the following items:
- Affordable and clean energy (SDG7),
- Decent work and economic growth (SDG 8),
- Supporting industry, innovation, and infrastructure (SDG 9) and Climate Action (SDG 13).
- Climate action (SDG 13).
In 2021, more than 48% of CIFI's portfolio went to renewable energy and provided access to clean energy to nearly two million people. CIFI's financing also contributed to an additional 538 MW of renewable energy operating capacity and reduced CO2 emissions by more than one million tons.
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PCR raises our risk ratings
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The Pacific Credit Rating Committee has upgraded the ratings of our programs. This good news brings security and confidence to our clients, to whom we provide proactive management of their investments. We are proud of this qualitative step and are pleased to share the new ratings obtained:
- Financial Strength goes from paAA- to paAA-
- Revolving Corporate Bond Program, from paAA- to paAA
- Negotiable Commercial Paper Program remains at pa1+
The Commercial Paper Revolving Program modifies its outlook from "Positive" to "Stable" for Corporación Interamericana para el Financiamiento de Infraestructura, S.A. with information as of December 31, 2021. In the opinion of the PCR committee members, the rating is based on the adequate management of its loan portfolio and a sustainable portfolio. It also considers the geographic sector risk exposure in its major placements, its good operational management, its adequate credit coverage, and the excellent liquidity contingency plan to face the possible effects of the pandemic, as well as its positive results during the last five years. The rating also considers the solid solvency of the corporation and the support provided by its principal multilateral shareholders, which allow easy access to financing lines.
Fabio Arciniegas - CIFI's Chief Operating Officer, tells us, "Pacific Credit Rating upgraded CIFI's long-term rating from AA- to AA. Their decision is based on the company's demonstrated commitment to its customers, lenders, and shareholders; the strength and consistent returns to its shareholders, combined with an improvement in its solvency and credit quality indicators". |
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The road to decarbonization; CIFI walks the walk.
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By: Carla Chízmar, Head of ESG
Over the last decade, CIFI has been strengthening its approach to the sustainability of its investments, as well as the progressive integration of a holistic strategy to manage environmental and social risks while seeking to enhance the positive impacts of its portfolio.
This new ESG strategy was designed as a roadmap that would catalyze our business model into the era of sustainable and responsible investing. By 2019, we were already
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on track with our goals to measure our progress, prioritizing actions in areas that were key to our business model, such as Climate Change.
The global community, through the UNFCCC, has identified the financial sector as a crucial actor in the fight against climate change.
So far, the financial sector in Latin America and the Caribbean has not positioned itself at the forefront of innovation concerning decarbonization and considering climate risk. While there are several regional cases and best practices, the transition of LAC's financial and corporate infrastructure sectors will need to accelerate in the coming years for the region's nations to reach their self-determined emissions reduction targets.
This is why CIFI decided to accelerate the necessary transition of financial institutions in Latin America and raise ambitions to decarbonize their investment portfolio to align with a 1.5°C economy.
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Decarbonizing the investment portfolio reduces the global greenhouse gas (GHG) footprint. However, ESG data remains one of the main hurdles for the financial sector, as well as standardization of information, regulatory frameworks, and disclosure.
At CIFI, our first step forward was to ensure that we collected enough
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data of the right quality to draw conclusions and develop viable strategies. It required significant support from our like-minded partners, technical assistance, commitment, and intellectual capacity to overcome challenges and break paradigms.
Credibility and accountability are vital to supporting continued progress toward global sustainable goals. Investors are increasingly interested in meeting public demands while sustaining growth. During 2020 and 2021, we witnessed significant progress toward unified criteria for sustainable or green finance driven by regulators seeking to reduce the potential for greenwashing.
At CIFI, we have built a strong business case for sustainability that translates into customized financial products for our investors and clients in one of the most relevant niches: middle-market infrastructure in emerging markets.
After thorough consideration, CIFI updated its Exclusion List in December 2021 to reflect our more substantial commitment to managing climate risks and supporting the fight against climate change. In the future, CIFI will no longer finance fossil fuels, except gas (midstream/downstream), as discussions remain vibrant regarding its potential to serve as a transition fuel, especially in our region.
In line with our climate change objectives, this bold move will reduce our transition risk and curb directly financed emissions to reduce our overall carbon footprint. Therefore, CIFI chooses a decarbonization path focused on allocating assets in low-carbon intensity projects and progressively divesting from carbon-intensive sectors.
After three years of data collection to measure our carbon footprint, we have seen our climate change strategy's results unfold faster than expected. We reduced our total financed emissions by a third from 176 thousand tCO2e in 2019 to 58 thousand tCO2e in 2021 while maintaining a portfolio with an average potential of more than one million tCO2e of avoided emissions per year.
Directly attributable financed avoided emissions from our renewable energy portfolio (47 % share) by 2021 amounted to 122 thousand tCO2e. In turn, directly financed emissions generated across our entire portfolio amounted to 58 thousand tCO2e in 2021. CIFI's avoided emissions are double our carbon footprint. A result that undoubtedly fills us with pride and responsibly and transparently supports our commitments to the fight against climate change.
Looking ahead, we continue to exercise a rigorous risk management system and a policy of transparency that guides us towards the best performance in our asset class.
2022 is the year we will write our first Decarbonization Plan, launch our first Sustainable Infrastructure Debt Fund, and celebrate 20 years in the market, providing much-needed financing for infrastructure projects in our region that support the global Sustainable Development Goals.
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Integrating ESG criteria, a crucial part of our strategy
This year CIFI has joined TFCD (Task Force on Climate-Related Financial Disclosures). The information collected by the companies adhered to this team will report data that will help improve how climate-related risks are assessed, mitigated, and managed.
At CIFI, we will continue to act so that more people and companies walk with us on a path that leads ordinary people to do great things for our people, the environment, and the planet.
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To that effect, we invite you to look at our latest Annual Sustainability Report; there, you can learn about CIFI's Environmental, Social, and Governance statistics, policies, strategies, and achievements.
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CIFI participates in panel on the future of energy in the Caribbean
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Antonio Araúz, from the Investment team, participated in the Platts Caribbean Energy Conference, held in Miami on June 27.
Araúz was invited as a speaker on the panel "Power Finance and Investment in the Caribbean Region" to discuss the prospects and new directions for energy and project finance in the Caribbean. Professionals from more than 40 countries took advantage of this space to exchange visions and business opportunities for the renewable energy sector.
These invitations are a recognition of the work of the CIFI team’s professionals and the value of the experience that the company has amassed in the energy sector in its 20 years of existence.
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The first cycle of 2022 ESG training courses culminates.
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The first cycle of ESG training for the year 2022 was recently completed. It was carried out with the support of the Business and Human Rights of Spain, with whom human rights issues were addressed.
This training cycle responds to the new Equator Principles regulations effective as of 2021 and the E&S Action Plan that we comply with as recipients of the credit line from our shareholder FinnFund.
Three training sessions were held for the Business, Portfolio and Origination, ESG, and Legal teams. The consultants noted that our process is correct, highlighting the company's commitment and our collaborators' notorious experience and technical capacity.
At the end of the training, a feedback session was held with the team of consultants to evaluate opportunities for improvement. These findings and conclusions will help develop new guidelines to strengthen our credit process based on the risks to human rights in our operations.
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CIFI plants 150 seedlings in Camino de Cruces
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On June 17 and for the second consecutive year, CIFI participated in the project Deja tu Huella- Siembra tu Árbol, together with the Asociación Nacional de Reforestadores y Afines de Panamá (ANARAP). On this occasion, 150 trees of native species were planted in the protected areas
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of Camino de Cruces Park. The Ministry of the Environment assigned this site. It was reforested to enrich the scope and degrade it from thatch to forest with native species that can withstand the climatic and soil conditions of the area.
This corporate social responsibility (CSR) program includes, in addition to the seedlings and land preparation, the maintenance of the reforested plot for two years, thus ensuring the continuity and success of CIFI's commitment.
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CIFI NEWS OCTUBRE 2021
Edición #2
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