IFC Expands in Brazil with Focus on Midsize Companies and Sustainability
Lars Thunell, IFC Executive Vice President and CEO, concluded his visit to Brazil last week by emphasizing the priorities for IFC’s work with the country’s private sector. IFC will focus on midsize companies that can benefit from its expertise and with midsize banks that can expand access to finance for small and medium enterprises. IFC will also continue leading on issues of sustainability, particularly in the Amazon.
This was Mr. Thunell’s first official trip to Brazil as head of IFC. He visited to see first-hand some of IFC’s operations in the country, and to learn more about the complexities of sustainable development in the Brazilian Amazon.
“Midsize Brazilian companies have the capacity to go global,” said Thunell, “and we are interested in supporting their growth.” He added that IFC’s strategy to move closer to the mid-market segment, while reflecting liquidity in the market, is primarily an effort to help companies become global players by raising social and environmental standards as well as overall corporate governance. For example, during his visit Thunell signed a $40 million financing for Sabó, a supplier of auto parts headquartered in São Paulo. IFC’s investment supports the company’s expansion and will help the family-owned business become more competitive in the global market.
IFC’s strategy also envisions working more with Brazil’s midsize banks to ensure that credit is available to smaller businesses. The focus is on underserved people and regions and on types of financing with strong potential to advance the country’s development, such as student loans and housing finance. For instance, IFC made an equity investment in Banco Fibra, a bank that is expanding into Brazil’s less prosperous northeast.
Sustainability and the Amazon Rain Forest
“Brazil is a clear leader on issues of sustainability. I am struck by the number of banks that have adopted the Equator Principles, as well as the quality and commitment of many of the clients and entrepreneurs I have met. And the country’s whole renewable energy sector is booming,” stated Thunell.
During the visit, IFC announced that it will provide Banco ABN AMRO Real with a $200 million sustainability credit line, enabling Banco Real to fund clients’ projects that have a significant impact on environmental and social sustainability.
“For both IFC and Banco Real, this is an important milestone, not only because of the size of the credit line, but also because it demonstrates how our two institutions are continuing to set high benchmarks for sustainability-related lending,” said Thunell. He added that IFC’s partnership with Banco Real continues to heighten awareness in Brazil’s financial and commercial sectors of the great business potential for sustainability-related banking.
Thunell also visited parts of the Amazon. In Manaus, the capital of the state of Amazonas, he discussed the region’s sustainable development with Governor Eduardo Braga. Here Thunell also visited the industrial sector.
“What I found most surprising to see up close is the scope and diversity of the Amazon,” said Thunell. “The issues here are big and complex. One key challenge is to create incentives for business operations that make illegal activity less and less rewarding. What we need to do is improve the economics for sustainable business.”
Thunell also participated at a roundtable discussion with Brazilian NGOs working in the Amazon. He noted that IFC can play a catalytic role in the region’s development by promoting a coalition among various stakeholders, including the private sector, to strengthen supply chains, especially in agribusiness and forestry.
Atul Mehta, IFC Director for Latin America and the Caribbean, and Andrew Gunther, IFC’s Brazil Country Manager accompanied Thunell during the visit. The trip included a stop in Brasilia to meet with the President’s Chief of Staff, Mrs. Dilma Roussef, to discuss ways of working together to improve Brazil’s infrastructure.
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