IFC and Wachovia Co-Arrange Financing to Mibanco in Peru, Latin America’s First International Syndication for Microfinance
IFC, a member of the World Bank Group, and Wachovia Capital Markets, LLC have co-arranged a $40 million syndicated financing agreement that will enable Peru’s Mibanco (Banco de la Microempresa S.A.) to offer longer loan maturities to its microenterprise clients and reach more customers in rural areas. The transaction is the first international syndication for a microfinance institution in Latin America.
Mibanco has provided more than two million loans to low-income individuals and small businesses in Peru, many of whom had little or no prior access to formal credit institutions. IFC’s financing supports the bank’s growth strategy, which aims to expand the penetration of microloans outside the Lima area and in rural areas, where financing needs remain very high.
Rafael Llosa, Mibanco’s General Manager, said, “This financing, the first of its kind for a microfinance institution in the region, will allow us to continue diversifying our funding sources. It also supports Mibanco’s strategy for expanding our microfinance portfolio. We are very pleased with this transaction and with the continuing support from IFC, a long-term partner of ours since 2001. This financing also opens Mibanco’s access to the international financial community and sets an important precedent for the microfinance industry in the world.”
Through this transaction, IFC and Wachovia Capital Markets, LLC, the mandated lead arrangers and bookrunners, have also helped Mibanco broaden its relationships with international banks. This significantly diversifies its funding base, a key ingredient for future growth.
Originally structured as a $30 million loan, the syndication was oversubscribed by $18 million and attracted 10 participant banks from North America, Europe, Asia, and Latin America. Lead arrangers with $5 million shares include Bancolombia, HSBC, Natixis, Rabobank, and State Bank of India, and Wachovia Bank. Co-arrangers with $3 million shares include Israel Discount Bank, Republic Bank, and WGZ Bank; Minlam Asset Management, a microfinance-focused fund, participated with $1.5 million.
Ritva Laukkanen, IFC’s Director for Syndication and Resource Mobilization, noted, “The success of this syndication represents a strong vote of confidence—in Mibanco and the region’s microfinance industry—from the international financial community. Promoting microfinance services, a pillar of IFC’s strategy, is a key tool for creating opportunities and eradicating poverty. It makes basic financial services available to those left out of the traditional banking system.”
“We are pleased with the success of this transaction, which reflects both the quality of Mibanco and the increasing interest in the international financial community to support microfinance,” said Carlos Perez, Managing Director of the Americas for Wachovia’s Global Financial Institutions and Trade Division. ”Microfinance institutions enable business development in impoverished areas by providing access to modern financial tools. We bring Wachovia’s support to Mibanco, including our experience and relationships with thousands of banks and financial institutions around the world.”
IFC’s relationship with Mibanco started in 2001, when IFC extended a five-year, $5 million loan to help the bank expand its lending activities outside the Lima area. As Mibanco increased its lending and opened new branches, its funding needs increased, leading to a second loan from IFC, of $29 million, in June 2006. In April 2007, IFC extended a third round of financing, consisting of a $7 million subordinated loan (counting as Tier 2 capital) to support Mibanco’s capital base and high growth. Building on its lending relationship, in June 2007 IFC became a shareholder in Mibanco with a 6.5 percent equity stake.
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
Mibanco is the leading microfinance bank in Peru. It is the country’s largest provider of microfinance loans by number of clients served and the second-largest in terms of loan volume. As of September 30, 2007, it reported a 14.2 percent market share with total assets of over $512 million and net worth of $59 million. Mibanco has a network of 81 branches and 25 ATMs, serving a customer base of over 376,000. Mibanco’s strategy is to target the middle and lower sectors of the microfinance market, where the demand for microcredit is highest and the supply weakest. Mibanco offers both lending and savings products. Loans are used for working capital and fixed investment needs. For more information, please visit http://www.mibanco.com.pe.
Wachovia Corporation (NYSE:WB) is one of the nation’s largest diversified financial services companies, with assets of $754.2 billion and market capitalization of $95.3 billion at September 30, 2007. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to 13 million household and business customers. Wachovia has 3,400 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending, and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Retail brokerage operations under the Wachovia Securities brand name manage more than $800 billion in client assets through 11,400 registered representatives in 786 offices nationwide. The recent acquisition of A.G. Edwards, Inc., added about 740 offices, 6,300 financial consultants, and $384 billion in brokerage client assets. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.
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