IFC Investment in Factorline Helps Expand Lending to Chile’s Underserved Small and Medium Enterprises
IFC, a member of the World Bank Group, announced today that it will acquire an equity stake in Factorline, a leading factoring and lending company in Chile. This will help the company enhance its capital base and expand its lending activities, focusing on underserved small and medium enterprises.
IFC will invest up to $15 million for about an 18 percent stake in Factorline, raising the company’s capital base to about $46 million. Factorline, an existing IFC client, differentiates itself by targeting smaller businesses whose needs are not typically met by the traditional banking sector. This will help foster the growth of domestic and international trade by SMEs in Chile.
Jorge Sabag Sabag, President of Factorline, said, “We are delighted that IFC is becoming a shareholder of our company. This investment will support our further growth and goals by increasing our capital and contributing to the enhancement of the company’s corporate governance standards.”
Jyrki Koskelo, IFC Director for Global Financial Markets, said, “By becoming a substantial shareholder in Factorline, IFC is strengthening its relationship with an important niche player, supporting the local financial sector, and fostering financial intermediation for the benefit of smaller businesses.”
Yolande Duhem, IFC Country Manager for Chile, added, “This transaction is consistent with IFC’s strategy to focus on high-impact areas, including support for SMEs, low-income housing, education, sustainable finance, and infrastructure. We are helping Chile’s private sector respond to a changing global economic environment, particularly in the government’s priority areas of growth and equal opportunity.”
IFC’s initial investment in Factorline was a $5 million senior long-term loan in 2005. Over the last five years, IFC has committed a total of $410 million in Chile, primarily in infrastructure and education projects.
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through loan participations and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit www.ifc.org.
Factorline S.A., established in 1993, is a leading company that offers domestic and international factoring services to small and medium enterprises in Chile, as well as auto and consumer loans to middle- and low-income people. Factorline has total assets of over $200 million and serves about 5,000 clients. The company is headquartered in Santiago and has a network of 22 branches across the country. Factorline is active in national and international factoring networks, such as Asociación Chilena de Empresas de Factoring A.G. in Chile and Factors Chain International, the largest international association of factoring companies. Since March 2007, Factorline is controlled by Inversiones Bancarias S.A. which in turn is controlled by the brothers, Julio, Eduardo & Ricardo Massu.
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