The FINANCIAL — IFC, a member of the World Bank Group, is investing in EMBonds, a London-based electronic marketplace for emerging market bonds, to help develop robust capital markets that contribute to financial stability and economic growth.
IFC and the Digital East Fund of Earlybird Venture Capital invested $6.8 million in equity to support EMBonds’ expansion across Europe and beyond. Launched in 2015 as the world’s first electronic trading platform for emerging market bonds, EMBonds currently covers Turkey, Hungary, South Africa and Poland having signed on 16 institutions. It allows buyers and sellers to trade directly rather than through the few global banks that act as market-makers, according to IFC.
“IFC’s involvement plays a catalytic role for other investors in EMBonds and for the acceptance of the trading system by potential clients, which will allow us to establish a strong base and further expand our business in emerging markets,” said Mehmet Artun, CEO of EMBonds.
EMBonds’ trading system enables banks in emerging markets to directly trade local bonds as well as eurobonds with international clients such as pension funds, hedge funds, and asset managers, increasing market efficiency and transparency. Governments and corporations in developing countries will benefit from a more liquid and transparent market for their debt, which could reduce borrowing costs.
“Hundreds of startups each year are engaging with Earlybird and other European venture capital firms to finance new financial technology businesses,” says Roland Manger, an Earlybird partner and member of EMBonds´ board of directors. “Rarely have we seen a proposal with such a profound potential impact on the enterprises and sovereign entities in emerging markets finance.”
Atul Mehta, Director of TMT, Venture Capital & Funds Department of IFC, said: “Developing local capital markets is a strategic priority for IFC, as we realize that deep, efficient local capital markets are the foundation of a thriving private sector, the key driver of jobs and growth. We support pioneering companies like EMBonds, who contribute to this goal by developing and implementing innovative technology.”
IFC’s TMT group focuses on improving access to information infrastructure and services and using media to expand the delivery of public and private services and promote innovation in industry and grassroots entrepreneurship. Over the last twenty years IFC has provided more than $6.5 billion in financing to more than 115 telecom and IT projects in developing countries.