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Bonds issued in new super-charity

Finance | Ian Allsop | 15 Apr 2008

The International Finance Facility for Immunisation, a new charity that could become one of the UK’s largest in terms of income, has issued its inaugural bonds.

IFFIm, as it is dubbed, is a new international development institution designed to accelerate the availability of funds to be used for health and immunisation programmes through the GAVI Alliance in 70 of the poorest countries around the world.

It was registered as a charity with the Charity Commission in June and hopes to raise US$4bn over the next ten years.

The GAVI Alliance is an alliance of all the major stakeholders in immunisation, and includes among its partners developing country and donor governments, the World Health Organisation, Unicef, the World Bank, the vaccine industry in both industrialised and developing countries, research and technical agencies, NGOs, and the Bill & Melinda Gates Foundation.

1.7 million lives saved

It is estimated that more than 1.7 million early deaths will have been prevented as a result of support by GAVI up to the end of 2005, and its success in the past five years has led six European nations (UK, France, Italy, Norway, Spain and Sweden) to make legally-binding commitments to IFFIm.

Using those commitments, IFFIm anticipates raising significant sums of money in the international capital markets to support GAVI’s health and immunisation programmes in developing countries.

Up-front investment 

By investing the majority of IFFIm resources up front, it hopes to significantly increase the flow of aid to ensure reliable and predictable funding for immunisation programmes and health systems. The Chancellor, Gordon Brown, called the issuance “a unique approach to financing for development”.

Alan Gillespie, chair of IFFIm, said: “The creation of IFFIm provides investors with an opportunity to participate in the scaling up of a highly successful public-private collaboration that is focused on saving and improving the lives of the world’s youngest and most vulnerable citizens.”

Gillespie continued: “In addition we are being given the opportunity to demonstrate a new way of funding international development, addressing the seemingly intractable problems of poor nations with a tried and true financing model from the capital markets.”

Although bond finance has been used by the Wellcome Trust and Mencap in the past, Pesh Framjee, head of charities at Deloitte, auditor and adviser to IFFIm, said the sheer scale of the IFFIm scheme pointed the way to the future of using the capital market as an innovative and effective form of fundraising.

'A good investment'

“Not all the investors are doing it for altruistic reasons but because it is a good investment. However, by engaging these people with the sector, hopefully they will be donors in other areas in the future.”

The issue provides investors with a 5 per cent annual coupon as well as an annual yield of 5.019 per cent, equivalent to a spread of 0.31 per cent over the underlying five-year US Treasury benchmark. The inaugural bond will mature on 14 November 2011.

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