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Equity Guarantee

Definition

The Equity Guarantee (EG) guarantees a known equity investor or venture capital fund.

Limit

The indicative limit for Equity Guarantee is USD 1,000,000. However, AGF has the capacity to provide guarantee support for amounts higher than this limit, depending on among other considerations, the nature and type of support required

Coverage Rate

AGF’s guarantee coverage rate is based on the principle of having a balanced sharing of risks between the Guaranteed Party and the Guarantor rather than a transfer of all the risks. This risk sharing model translates into a guaranteed maximum coverage rate of 50% of the financing involved subject to the guarantee type limits.

Exceptions to this rule are co-guarantee arrangements whereby for Equity Guarantees total coverage rate can go up to 75% of total investment.

Tenor

Equities are covered for their full life, subject to a maximum of 10 years

Currency

To avoid currency exposure, AGF will issue its guarantees in the currency of the underlying financing.

Pricing

AGF uses a Price-to-Risk model in arriving at the actual pricing for a guarantee facility to be availed to a particular financial institution. Pricing may vary across banks depending on the quality of the portfolio as measured by among others, the default rate.

 

Guarantee Type 

 

Equity Capital Guarantee

 

Coverage 50% can go to 75% in case of co-guarantee
Origination Fees [0.5%-1%]
Utilisation fees  [2.0%-4%]
Tenor  <= 10 years 
Limit  Flexible 
Benefits Can significantly decrease the risk appraisal for an investor looking at providing Equity or Quasi Equity

 

*Complimentary Capacity development on a 50%-50% cost sharing basis

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AGF: Voice Behind The Numbers
Green Finance Conference
Abidjan, Côte d'Ivoire
2016 AGF Annual Report
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