WASHINGTON, D.C., Aug. 23 -- The International Finance Corporation (IFC) has approved three new projects -- credit lines for Sogewiese Leasing S.A. in Peru and and Corfinsura in Colombia and an investment in the Proa Fondo de Inversion de Desarrollo de Empresas in Chile -- designed to boost local capital markets as well as support small and medium-sized enterprises (SMEs). In Brazil, IFC has approved two capital subscriptions totaling US$750,000 in the CRP-Caderi venture capital fund, which is investing in SMEs in the southern states of Rio Grande do Sul and Santa Catarina.
"IFC is investing in credit lines and private equity funds to make longer-term finance available to small and medium-sized companies as they seek to enhance their competitiveness in Latin America's more open economies," according to Mr. Julio F. Lastres, Manager of the Capital Markets Division in IFC's Latin America and the Caribbean Department. "Our investments in private equity funds also help SMEs gain much-needed equity finance, as opposed to their traditional reliance on family and friends for capital, and enable us to share our global experience with local fund managers as they invest in SMEs."
In Peru, IFC is extending a credit line of US$30 million, up to US$20 million of which will be syndicated with international commercial banks, to Sogewiese Leasing S.A., a specialized leasing company. The demand for leasing in Peru is expected to increase substantially in the near future. IFC will also extend a risk management facility to the company, enabling it to structure fixed- or floating-rate leases.
In Colombia, IFC has approved a credit line of US$80 million, of which up to US$40 million will be syndicated with international commercial banks, for Corporacion Financiera Nacional y Suramericana S.A. (Corfinsura), a development finance company. About 40 percent of Corfinsura's clients are small and medium-sized firms. IFC will also extend a risk management facility to Corfinsura.
In Chile, IFC has an approved an equity investment of the lesser of US$10 million or 20 percent of total capital in the Proa Fondo de Inversion de Desarrollo de Empresas, a new closed-end private equity fund that will invest in unlisted SMEs and provide strategic and financial expertise. The Fund is also designed to stimulate the transition of companies from unlisted to listed equity markets in Chile through public offerings of its client companies' shares.
The Fund's initial target size is US$50 million, to be raised primarily from Chile's private pension funds, the country's most important institutional investors. The Chilean government has gradually liberalized financial markets to permit investments by the private pension funds in private equities, through specialized vehicles like the Fund.
Proa S.A. Administradora de Fondos de Inversion, a subsidiary of Moneda Asset Management S.A., will manage the Fund. Moneda was formed in 1994 to promote professional asset management and more specialized investment vehicles in Chile. IFC also is a shareholder in Moneda's Pionero Fund, which invests in listed Chilean small-capitalization companies.
In Brazil, Stanley R. Greig, IFC's Resident Representative in Sao Paulo, will be joining the Board of Directors of CRP-Caderi Capital de Risco S.A., a closed-end venture capital fund that makes direct equity or quasi-equity investments in small and medium-sized enterprises. IFC has invested US$1.5 million in the Fund, which was originally approved in fiscal year 1992.
Since then, the Fund has raised almost US$5 million for investment in SMEs, and should reach its target of US$10 million in early 1996. Thus far, it has made 7 investments for a total of about US$3.3 million in such sectors as computer software, auto parts, and paper products.
"Although Brazil's stock markets are well developed, small and medium-sized companies do not have ready access to equity finance," according to Mr. Greig. "The Fund will work with its client companies to enable them to meet the information requirements necessary for publicly listing their shares. It should stimulate the growth of over-the-counter equity markets in southern Brazil, which, in turn, may serve as a model for the rest of the country."
IFC is a member of the World Bank Group and is the leading multilateral source of equity and loan finance for private sector projects in developing countries.
