In an increasingly integrated and competitive world economy, Canadian companies of all sizes are discovering that investing abroad, such as setting up a local sales office or a manufacturing facility in a foreign market, is a strategic way to achieve numerous business goals.
In recent surveys*, EDC Research Panel respondents indicated that making foreign investments resulted in increased sales, lower costs and improved productivity. Other perceived benefits included market expansion and penetration, better customer support, increased competitiveness, and the ability to access sources of supply, new technology or labour.
At the same time, making overseas investments is a complex undertaking, and obtaining financing and finding information on foreign markets are challenges for them. At EDC, we have a wide range of solutions, under our Canadian Direct Investment Abroad (CDIA) program, to help companies like yours invest abroad as part of your long-term, integrated business strategy.
I need financing from a foreign bank
If you need to secure an operating line of credit or other financing from a foreign bank, obtain letters of guarantee for suppliers, or meet landlord/lease obligations, your bank will usually want collateral – and that can tie up your working capital. We can offer a 100 per cent, irrevocable and unconditional, second-demand guarantee that can satisfy this demand and help free up your operating line.
I want to insure the receivables of my foreign affiliate or subsidiary
In some markets, we can support your foreign direct investment by extending our Accounts Receivable Insurance to your foreign affiliate – which covers your full book of export business for up to 90 per cent of your losses against such commercial risks as your customer refusing to pay.
I need to post bank guarantees for my foreign affiliate or subsidiary
If your foreign affiliate or subsidiary needs to post bank guarantees such as bid bonds, advance payments bonds, suppliers bonds or any other performance or financial obligations, your bank will usually want collateral – and that can tie up your working capital. We can offer a 100 per cent, irrevocable and unconditional, demand guarantee to your bank that can satisfy this demand and help free up your operating line.
I need to post a bond for my foreign affiliate or subsidiary without tying up our bonding capacity
We can offer a 100 per cent guarantee reinsurance capacity to your surety company so that it can issue a bond in support of your foreign investment without tying up your bonding capacity.
I’m concerned about the political situation in a foreign market
If you have equipment or investments in facilities or operations in a foreign market, political risk is often a fact of life. With our Political Risk Insurance (PRI), we cover up to 90 per cent of your losses in those markets against certain risks such as expropriation, conversion risk and political violence. This insur¬ance also gives investors confidence to support your expansion plans. Our policies can be tailored for investments of any size and to suit various transaction structures and political risks.
I need access to a larger operating line but my bank is not comfortable on its own
You need to manage all kinds of upfront costs before you are paid. Our Export Guarantee Program shares the financial risk with your bank so you can get the financing you need to break into new markets, increase production for a new order or support foreign investments.
I am mid-sized company with at least $10 million in annual revenues, looking for support for a potential investment in foreign assets
If you are a mid-size company looking to invest internationally and you have at least $10 million of annual revenues and at least three years of operations, we can consider, with the support of your financial institution, a direct loan to finance foreign assets under our Foreign Investment Financing solution.
In our experience, the transactional costs of doing small international loans (less than $1 million) typically outweigh the benefits. For these smaller transactions, solutions other than direct loans can be explored, such as our export guarantee, bonding, or insurance programs.
Our support will depend on the need and we will aim to fund a solution that is best for all parties including you and your bank.
I’m interested in investing in other markets, but I need to learn more about them
To learn more about latest trade trends and to download free country and information guides, visit our Knowledge Centre. In this site we have centralized our online references, and organized them so you can easily find all the information you need.
*Trade Confidence Index (TCI), Pulse Check of Canada’s Trade-Engaged Business Community, Spring 2012. EDC Research Panel, Canadian Direct Investment Abroad Survey, 2010. The EDC Research Panel is comprised of about 1,000 Canadian businesses that export or plan to export, and comprise a cross-section of industry sectors, regions and business sizes. Not all panellists respond to all surveys.