Cisco pledges additional capital to drive growth in emerging markets

Networking equipment vendor Cisco secures financing agreements with three banks as it bids to ensure that channel partners have access to adequate working capital

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By  Administrator Published  January 1, 2007

Networking colossus Cisco has announced an additional US$2 billion of short-term inventory financing to fuel further growth in fast-growing emerging markets.

Cisco has signed financing agreements with Citibank, GE Capital Solutions and Standard Chartered Bank. The three Cisco Capital financing partners will provide US$2 billion of short-term inventory financing capacity on an annual basis 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 additional US$2 billion inventory financing is partially enabled by the US$500m short-term growth capital fund that Cisco announced last year. The vendor has also expanded coverage of its end-user leasing schemes in emerging markets.

During the last year Cisco has added seven specialist distributors in emerging markets and increased its base of certified channel partners by around 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.

Cisco also plans to roll out SMB financing in 14 new emerging markets during the next year, including in Saudi Arabia.

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