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Expression of Interest for Sri Lanka Capital Market Development. Publication Date: 03/17/2026 12:00 AM EDT EOI Deadline: 03/31/2026 11:59 PM EDT The International Finance Corporation (IFC) is the private sector arm of the World Bank Group (WBG). Its mission is to promote sustainable private sector investment in developing and transition countries, helping to end poverty on a livable planet. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and risk mitigation services to businesses and governments. In fiscal year 2023, IFC delivered $7.6 billion in climate finance and mobilized an additional $6.8 billion from other sources. For more information, visit www.ifc.org. IFCs Financial Institutions Group (FIG) has three main objectives: financial inclusion, servicing the real economy, and mobilizing third-party resources. FIG engages in various sub-sectors, including Microfinance, SME, Gender, Climate, Capital Markets, Housing, and Distressed Assets, providing investment and advisory services globally through IFCs network. IFCs FIG Advisory Services in South Asia focuses on financial inclusion to enhance the availability and affordability of financial services for both corporate entities and individuals. By collaborating with local financial institutions, FIG develops innovative products and services tailored to the needs of underserved populations. B. PROJECT BACKGROUND As part of its pursuit to build a fair, transparent and efficient capital market that contributes to the national economic growth, the Securities and Exchange Commission of Sri Lanka (SEC), has developed a capital market strategy for 2025-2035, which encompasses 12 pillars - twelve key reforms for capital market development over the next 10 years to modernize market infrastructure, enhance regulatory capacity, introduce innovative financial products, and strengthen investor confidence. Sri Lankas capital market remains nascent and underdeveloped, with a market capitalization to GDP ratio of 27% as at 2025, lagging behind other emerging and frontier Asian nations such as Vietnam (46.9%), Indonesia (55%), Philippines (74.7%), and Thailand (100%). Furthermore, daily equity turnover is below US$10 million, indicating significant illiquidity, which is further exacerbated by domestic institutional investors such as the state pension funds preference to allocate funds mainly to term deposits and government bonds, while insurance companies who face asset-liability mismatches are limited to investing in government bonds due to lack of alternative long-term instruments. Despite being a constituent of the MSCI Frontier index (0.7%), the capital market falls short of attracting significant foreign investor flows who account for 10% of trading turnover, due to some market accessibility constraints, small domestic investor base, foreign exchange stability, and debt sustainability, amongst other things. Although private sector funding needs, must be addressed, sovereign debt dominates Sri Lankas debt capital markets, accounting for approximately 83% of GDP, while the corporate bond market represents merely 1%. This dominance, coupled with high entry costs (i.e. listing and compliance costs) and investor demands for additional credit enhancements, presents significant barriers for new corporate issues. The benchmark government bond yield curve is focused on short- to medium-term maturities, limiting price discovery and liquidity for longer-term instruments. C. OBJECTIVE/PURPOSE OF ASSIGNMENT IFC is seeking a Consulting Firm (the Consultant) to work with the Sri Lanka Capital Markets Project Team to undertake a thorough capital market assessment and to identify two to three areas for intervention based on market realities, in order to support market development and related reforms aligned with SECs 12 pillars. The assessment will be carried out in two phases and conducted in line with World Bank Groups Capital Market Preconditions Framework, (i) macroeconomic environment, (ii) sound banking system, (iii) regulatory, and supervisory framework, (iv) sizeable market (investors, issuers and intermediaries), (v) institutional framework (including market infrastructure). The Consultant will undertake a comprehensive Diagnostic and Scoping (D&S) exercise to help realize the above objectives, which include: 1) Provide a high-level overview of the status and level of development of the capital market, based on World Bank Groups Capital Market Preconditions Framework: (i) macroeconomic environment, (ii) sound banking system, (iii) regulatory, and supervisory framework, (iv) sizeable market (investors, issuers and intermediaries), (v) institutional framework. 2) In line with SECs capital market plan, the consultant will assess existing Equity and Corporate Bond market, including legal and regulatory as well as demand and supply side analysis, to identify key gaps and challenges as well as provide recommendations to increase listings and develop liquid secondary markets 3) The consultant will also assess the feasibility, gap analysis and develop a roadmap for new product markets identified in the SECs capital market plan, namely- Securitization, Collective Investment Schemes (Unit Trusts, ETFs and REITs) and Alternative Investment Funds (AIF), as well as Derivatives. This assessment will cover legal and regulatory as well as demand and supply analysis 4) Conduct a benchmarking exercise, develop key recommendations and provide priority areas for capital market development This project aims to support the deepening of capital markets in Sri Lanka and contribute towards creating the market conditions for: 1) Increased primary market activities across debt and equities markets 2) Increased capital market liquidity through increased institutional investors participation 3) Market sophistication by creating innovative capital market products 4) Enabling regulatory environment to boost investor confidence D. SCOPE OF WORK, DELIVERABLES, TIMELINES & PAYMENT SCHEDULE In close collaboration with the IFC project team, the Consultant will conduct desk research, conduct interviews with relevant local regulators and market players/stakeholders and prepare a comprehensive report on all the key activities detailed below. During the assignment, the Consultant is expected to lead technical dialogues or discussions with policy makers, regulators, SROs/Market Infrastructure providers, potential issuers, institutional investors, market intermediaries like arrangers, broker/dealers and banks as well as counterparties, like rating agencies, capital market law firms, auditors. The firm is required to present findings of the study to designated stakeholders in the form of a comprehensive final report. This report should be delivered in both Microsoft Word and PowerPoint formats to facilitate use in dissemination workshops. The assessment will be conducted in two phases (Phase 1 & Phase 2). The estimated timeline for the entire market assessment is 6 months (3 months for each phase). The assessment is expected to be initiated as soon as possible; the date of contract award will be considered the start date of the assignment for all reporting purposes. Tender Link : https://wbgeprocure-rfxnow.worldbank.org/rfxnow/public/advertisement/6705/view.html
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