Frontera Capital Limited

Frontera Capital focuses on standard financial inter-mediation seeking to match international investor risk appetite with domestic funding needs in frontier markets, in terms of the principal components of the value chain – originating, structuring and distributing frontier market risk transactions. Since frontier market capital markets are not yet well developed, but are developing rapidly, it makes sense to focus on where risk appetite is most likely to coalesce, including: Sovereign funding, which attaches the largest and most liquid sources of investment risk. Corporate funding, given both strong growth and bank lending regulatory restrictions (where Single Obligor Limits and constrained bank balance sheets from higher capitalisation requirements has boosted ‘shadow banking’ prospects in many frontier markets). Infrastructure project finance and hard asset financing, such as real estate funding. While Frontera Capital is seeking to meet investor risk and funding needs across the capital structure, the bias is expected to fall on debt capital markets (DCM) given the primary debt characteristics of frontier market finance. Frontier Markets A frontier market is an economic term coined by the International Finance Corporation in 1992 commonly used to describe a subset of emerging markets with much less developed economies and capital markets. Frontier markets are ‘investable’, but have lower bond and equity market capitalization and liquidity and turnover than established emerging markets. Frontier markets are typically pursued by investors seeking high, long term returns and low correlations with other markets. The implication of a country being labeled as frontier is that, over time, the market will become more liquid and exhibit similar risk and return characteristics as the larger, more liquid developed emerging markets. Frontier markets are more organized as an asset class in listed equities than in fixed income markets given the former’s classification on qualifying criteria for inclusion in ‘investable’ indices, notably the MSCI suite of frontier markets. The inclusion discretion of a market as ‘frontier’ is thus typically greater for dedicated fixed income vs. dedicated listed equity international investors. Below is a map of dedicated index qualifying equity markets, showing examples of developed, emerging and frontier equity markets.

Address: 29 Farm Street, London, W1J 5RL, United Kingdom

Phone: +44 203 709 4575
FAX: +44 203 170 8101