Cisco earmarks US$2bn for emerging market channels

Subsidiary to provide capital for investment

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By  Published  December 23, 2006

Networking giant Cisco has added US$2 billion to its investment in fast-growing em- erging markets. The vendor’s subsidiary Cisco Systems Capital has signed financing agreements with three partners — Citibank, GE Capital Solutions and Standard Chartered — to provide US$2 billion worth of short-term inventory financing capacity to Cisco channel partners in the Middle East, Africa, Latin America, Russia, CIS and Central and Eastern Europe. “Although many countries in the emerging markets are undergoing major social and economic transformation by implementing the most advanced technology, the lack of capital remains a formidable barrier,” explained Paul Mountford, president, emerging markets theatre at Cisco. “The breadth of financing solutions offered by Cisco Capital and its financing partners puts Cisco technology within the reach of our channel partners and will bring clear benefits, to both the end customer and the people and businesses they affect,” he added. The additional financing is partially enabled by the US$500million short-term gro- wth capital fund that Cisco announced last year. Cisco has made a significant investment in emerging markets over the past year, adding seven specialist distributors in emerging markets and increasing its base of certified channel partners by approximately 20%. According to Cisco, working capital is not readily available in many of the emerging markets and channel partners face long order-to-cash cycles due to a number of factors, including isolated geography and government regulations. “The financing announced provides the liquidity and working capital necessary to help our emerging market channel partners grow significantly, which is key to Cisco’s emerging markets strategy,” said David Rogan, president of Cisco Systems Capital Corporation. “Our financing partners provide both local presence and cross-border capabilities as well as an in-depth understanding of our emerging markets theatre. “With nearly US$10 billion in third-party inventory-financing capability today, Cisco Capital has created and implemented a global banking infrastructure, providing significant competitive advantage for Cisco with limited financial risk to the company,” he added. Cisco is also boosting its small and medium-sized business (SMB) financing capabilities in emerging markets. It plans to roll out SMB financing in 14 new emerging markets countries during its current fiscal year, including Saudi Arabia.

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