Washington, DC, June 28, 2005
— The International Finance Corporation, the private sector arm of the World Bank Group, will provide $5 million to Factorline S.A. in Chile to support the company’s international factoring expansion and diversify its funding sources.
Factorline, established in 1993, is a leading factoring company that offers domestic and international services to small and medium enterprises in Chile. Factoring entails the purchase of accounts receivable from companies, with the purchasing party managing the loan collections. This financing option provides an efficient tool for working capital management, which is especially useful for growing smaller companies.
Jyrki Koskelo, IFC’s director for Global Financial Markets, said, “By supporting Factorline’s international operations, IFC’s financing will help export-oriented smaller businesses, enabling them to expand their reach in international markets.”
Atul Mehta, IFC’s director for Latin America and the Caribbean, also noted, “This transaction fits with our strategy in Chile to support the local financial sector and foster financial intermediation for the benefit of smaller businesses.”
Factorline has a total portfolio of over $110 million equivalent and serves about 1,700 clients. The company targets small Chilean businesses that need a faster repayment of their sales receivables in order to finance their working capital needs. It is headquartered in Santiago and has a network of 16 branches across the country.
Factorline is very active in national and international factoring networks, such as Asociación Chilena de Empresas de Factoring A.G., an organization working to institutionalize and support the development of the factoring industry in Chile, and Factors Chain International, the largest international association of factoring companies.
Juan Mauricio Fuentes, General Manager of Factorline S.A., noted, "IFC’s financing is critical for supporting our international operations, which are mainly focused on the purchase of accounts receivable from small and medium export-oriented enterprises in Chile. Today, these companies are taking opportunities opened by Chile's trade agreements with other countries. This growth has created a stronger need for working capital."
IFC is helping the private sector in Chile respond to a changing global economic environment; this includes support for the government’s priorities, particularly in the areas of growth and competitiveness. Looking forward, IFC’s strategy for Chile will focus on high-impact areas, including support for small and medium businesses, infrastructure, and social sectors, as well as specialized financial market activity, including housing finance. As of May 31, 2005, IFC’s portfolio in Chile is $235 million.
IFC's mission
(www.ifc.org)
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, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
