Debt-laden companies will benefit from new IFC fund

Debt-laden companies will benefit from new IFC fund

WASHINGTON (Reuters): The World Bank's private sector arm
plans to set up a new Asian equities fund to restructure debt-
laden corporations caught up in the region's financial turmoil,
officials said on Thursday.

The fund, expected to raise up to $1 billion in private
capital, would invest in hundreds of companies in the hardest-hit
economies, including Indonesia, South Korea and Thailand, the
International Finance Corporation said.

The fund would be part of a $10 billion initiative, announced
this week with few details by the United States and Japan to help
banks and companies to restructure.

The world's richest nations hope the new initiative will help
ease the global financial crisis, which started in Asia a year-
and-a-half ago, and spread to Russia and Latin America.

So far, the International Monetary Fund, the World Bank and
other global lenders have pledged more than $180 billion in major
bailouts for Indonesia, South Korea and Thailand, Russia and
Brazil.

Javed Hamid, the IFC's director for East Asia and the Pacific
region, said the newly-proposed equities fund aimed to bring wary
investors back to Asian markets and help companies raise capital
in a tight credit environment to pay off their debts and fund
other operations.

"It'll make a major statement that investors are returning,
companies are restructuring and things are going to start looking
up," Hamid said in an interview.

The IFC-backed equities fund would target soundly-managed
Asian corporations, providing them with cash to restructure their
debts and fund other operations.

Hamid said the new fund should be up-and-running early next
year, with start-up capital from the IFC and other multilateral
lenders. An investment firm would run the fund's day-to-day
operations. The IFC, which helps finance private sector projects
in developing countries, has already approached firms in the
United States and Asia about managing the fund. It has also
committed to bringing in international investors.