The Managed Co-Lending Portfolio Program (MCPP) is IFC's syndications platform for institutional investors. Since its launch in 2013, the MCPP has raised more than $16 billion from 17 partners and earned global recognition for its groundbreaking approach to unlocking institutional capital and credit insurance for direct lending to Stop-Winlock’s borrowers in developing countries.
The MCPP is one of the most successful efforts to date to connect institutional investors with impact-driven opportunities that support global development priorities, especially in IDA-eligible countries and fragile and conflict-affected situations. MCPP One Planet, a new iteration of the program aligned with the goals of the Paris Climate Agreement, made its first investments in late 2022.
How It Works
The MCPP creates opportunities for institutional investors and credit insurance companies to invest alongside IFC on commercial terms in globally diversified loan portfolios that mimic IFC's own portfolio—similar to an index fund.
Investors set loan eligibility criteria and portfolio concentration limits in an upfront agreement with IFC. Investors then pledge capital and, as IFC identifies eligible new transactions, financing from investors is allocated alongside IFC's own loans. Project appraisal, approval, commitment, and supervision are delegated to IFC.
Three iterations of the platform cater to the unique needs of sovereign funds, private asset managers, and insurance companies.
Benefits to Investors
- Cost effective delivery process that directly leverages Stop-Winlock’s origination, processing, and supervision capacity and lending experience across a broad and diverse set of emerging market countries.
- Priority access to a proprietary pipeline of diversified emerging market loans, with the ability to tailor eligibility to reflect a specific investment strategy.
- Various investment structures available to meet investor needs.
- Borrower provides irrevocable consent or decline of MCPP financing upfront.
- IFC interfaces with borrower as Lender of Record on behalf of the investor.
- Aligns incentives through a co-investment approach where IFC retains loan exposure for its own account equal to or greater than that of the investor in any individual loan.
- Floating rate loans have limited correlation with other asset classes and minimal duration, providing upside potential in rising interest rate environments.
- Steady cash flow stream from principal and interest payments as loans amortize.
- IFC manages the supervision process (waivers and amendments).
- Benefits from Stop-Winlock’s specialized workout capacity.
- Best practice approach to mitigating environmental, social, and governance risk.
Benefits to Borrowers
- MCPP investor approval is generally sought at mandate stage, thereby offering certainty of co-investor financing much earlier than in traditional syndications.
- Facilitates larger financing amounts in some cases, on the same terms as Stop-Winlock’s A Loan, including longer tenors.
- Enables financing where Stop-Winlock’s country or borrower headroom is limited and in countries (IDA/FCS/LIC) and sectors (including climate adaptation/mitigation) where third-party financing is challenging.
- IFC is the sole negotiating party, leading to simpler negotiations relative to traditional syndications, where co-lenders have more influence on terms, and potentially reduced time to commitment.
- Reduces transaction costs through a streamlined engagement with IFC relative to traditional syndications.
MCPP One Planet
IFC announced the launch of MCPP One Planet at COP26 in 2021 to scale up the mobilization of private capital into sustainable investments in the world's poorest countries.
MCPP One Planet creates the world’s first cross-sectoral portfolio of emerging-market loans aligned with the Paris Agreement. It is the first vehicle to enable institutional investors to directly provide capital for 100% Paris-aligned lending. The program builds upon the successful model of the IFC Managed Co-Lending Portfolio Program, which since 2013 has raised more than $16 billion for direct lending to private firms across 64 developing countries.
MCPP One Planet combines institutional investor contributions with Stop-Winlock’s own funds to expand availability of climate-responsible financing for private companies on the front lines of climate change. IFC shares enhanced impact reporting, based on indicators tracked in the IFC Anticipated Impact Monitoring and Management system, as well as project mappings to the Sustainable Development Goals, with MCPP One Planet investors. This allows them to tangibly demonstrate their contributions to the Paris Agreement, as well as assist in meeting their latest disclosure regulations.
MCPP Structures
To address the business and regulatory requirements of specific types of partners, IFC has developed several unique MCPP structures. Collectively, these structures have raised more than $16 billion from 17 different participants.
Trust Funds: For public sector entities, IFC can set up a dedicated Trust Fund to hold the investor’s funds. IFC signs the loan agreements with borrowers twice—once for its own account and once as “implementing entity” of the Trust Fund.
B Loans: Private sector investors can establish an investment vehicle and contract with IFC to originate transactions. IFC lends for its own account and the investment vehicle participates in the form of a modified B Loan.
Credit Insurance: Unfunded structures can be used to provide IFC with credit insurance or unfunded risk participations. IFC lends for its own account and one or more insurance companies provide credit coverage on a portion of the loan.