BUDAPEST, HUNGARY, June 28, 1999 –The International Finance Corporation today signed an agreement to invest in a Hungarian leasing company, an important step in supporting the development of small and medium enterprises.
IFC will make a 24 percent equity investment for HUF240 million (approx. US$1 million) in Axon Vagyonkezelö, Organizációs és Befektetési Részvénytársaság (Axon).
The investment will go towards expansion of Axon, a leading agricultural and equipment leasing company based in Szolnok, in Eastern Hungary. The company also has offices in Debrecen, Szeged, Pecs and Budapest.
IFC's investment follows a parallel investment of the same amount by the Hungarian bank Inter-Europa Bank (IEB). IFC and IEB will each own 24 percent of the company, and the existing shareholders of the company would own the remaining 50 percent. The investment will also include a technical advisory component.
Mr. Harold Rosen, Director of IFC's Central and Southern Europe Department, said the investment would strengthen Axon's niche in the small and medium enterprise (SME) sector, particularly in agriculture. That, in turn, would foster development of SMEs in Eastern Hungary. He noted that, generally, in industrialized countries 25 percent of all investments are financed through leasing, the most important form of funding for SMEs. Only 15 percent of investments are financed through leasing in Hungary, indicating potential for significant growth.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
