Washington D.C., December 19, 2002
—The Board of Directors of the International Finance Corporation, the private sector arm of the World Bank Group, has approved an investment by the IFC in a leasing company in Iran.
The project consists of structuring and establishing a joint venture leasing company, Karafarin Leasing Company. The company would focus on medium-term equipment leases that would include medical, office, manufacturing, transport and construction equipment. Particular emphasis would be given to servicing the needs of small and medium enterprises (SMEs).
The company would be capitalized at US$10 million equivalent. IFC is proposing to invest up to $2 million in KLC’s share capital for a 20 percent ownership, in addition to a loan of up to $3 million. The project sponsors are Karafarin Bank and Natexis Banque Populaires, each with a 40 percent equity stake in Karafarin Leasing Company.
The project was developed in response to the shortage of term finance to the private sector in Iran and will have a significant impact on developing the leasing industry. The project will be an important source of medium-term funds for the private sector, particularly small and medium enterprises.
The Iranian financial system consists of 13 banks, 10 of which are state-owned and three of which are privately owned. Small and medium enterprises in Iran have had to rely largely on equity from family sources or internal cash generation.
“Through this small, catalytic investment in a leasing company, IFC will be helping to provide an alternate source of term finance for small and medium enterprises, which is expected to boost job creation and ultimately help expand a sustainable private sector in Iran,” said Peter Woicke, Executive Vice President of IFC.
IFC expects the demonstration effect of this project to lead to the development of a healthy and competitive leasing sector in the country and indirectly result in a broader progress in development.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to 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.
Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
For further information contact:
Joe O’Keefe, Manager, IFC Corporate Relations: 202-458-4032
Corrie Shanahan, Chief, Media Relations: 202-473-2258, Cell Phone 202-415-9676
