MICROCAPITAL BRIEF: International Finance Corporation (IFC) Capitalization Fund Loans $65m to Bank of Georgia

The International Finance Corporation (IFC) Capitalization Fund, which is managed by US-based IFC Asset Management Company, has disbursed a subordinated loan facility of USD 65 million to the Bank of Georgia, a commercial bank, to expand lending operations in Georgia. The loan has a 10-year maturity date and qualifies as Tier-II Capital, which is supplementary capital that adds to the bank’s reserves but is difficult to liquidate.

As of 2011, Bank of Georgia, which operates in Belarus and Ukraine in addition to Georgia, reported total assets of GEL 4.7 billion (USD 2.8 billion), client deposits of GEL 2.6 billion (USD 1.5 billion), a gross loan portfolio of GEL 2.6 billion (USD 1.5 billion), return on average total assets (ROAA) of 3.6 percent and return on average total equity (ROAE) of 20.4 percent. IFC Asset Management Company has USD 6.1 billion of assets under management as of August 2013, including USD 3 billion in its IFC Capitalization Fund, USD 1 billion in its IFC African, Latin American, and Caribbean Fund and USD 182 million in its Africa Capitalization Fund. IFC Asset Management Company is owned by IFC, a member of the World Bank Group.

By Meraj Husain, Research Associate

About Bank of Georgia

The Bank of Georgia is a commercial bank that was founded in 1994. It offers corporate and retail banking, wealth management and insurance services to clients in Georgia, Ukraine and Belarus. The bank has 199 branches and approximately 1 million retail and 171,000 corporate current accounts. As of 2011, Bank of Georgia reported total assets of GEL 4.7 billion (USD 2.8 billion), client deposits of GEL 2.6 billion (USD 1.5 billion), a gross loan portfolio of GEL 2.6 billion (USD 1.5 billion), return on average total assets (ROAA) of 3.6 percent and return on average total equity (ROAE) of 20.4 percent. The Bank of Georgia is a subsidiary of Bank of Georgia Holdings PLC.

About International Finance Corporation Capitalization Fund

IFC Capitalization Fund is a global equity and subordinated debt fund that was founded in 2009. It aims to speed up economic recovery while reducing the impact of the financial downturn that began in 2007 by supporting banks considered vital to the financial markets of individual developing countries. IFC has contributed USD 1 billion for the IFC Capitalization Fund, while the Japanese government has invested USD 2 billion. IFC estimates that the fund will have a total leveraged impact of around USD 75 billion as others co-invest with the fund. The fund is managed by the IFC Asset Management Company, which is a wholly-owned subsidiary of the World Bank’s IFC.

About International Finance Corporation (IFC) Asset Management Company

IFC Asset Management Company LLC, a wholly owned subsidiary of IFC, invests third-party capital, with the intention of enabling outside investors to benefit from IFC’s expertise in achieving strong equity returns, as well as a positive development impact in the countries in which it invests. IFC Asset Management Company has USD 6.1 billion of assets under management as of August 2013, including USD 3 billion in its IFC Capitalization Fund, USD 1 billion in its IFC African, Latin American, and Caribbean Fund and USD 182 million in its Africa Capitalization Fund.

About International Finance Corporation (IFC)

A US-based multi lateral development bank and member of the US-based World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of fiscal year-end 2013, IFC reported total assets of USD 77.5 billion.

Sources and Additional Resources

[1] International Finance Corporation: “IFC Capitalization Fund Invests $65 million in Bank of Georgia to Increase Access to Finance,” http://ifcext.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/2D4DD80CCB0BE41E85257C7700334552

[2] Bank of Georgia: “Annual Report 2011,” http://bankofgeorgia.ge/file.helix?i=7145ba82-3492-4acc-aca6-b0f5403d25bc&r=R&a=1

MicroCapital, February 11, 2014, “International Finance Corporation (IFC) Loans $4m to Grooming Centre in Effort to Reach 708k Nigerian Microenterprises,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-loans-4m-to-grooming-centre-in-effort-to-to-reach-780k-nigerian-microenterprises/

MicroCapital, February 7, 2014, “International Finance Corporation (IFC) Loans $20m to Attawfiq Micro-Finance for Microlending in Morocco,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-loans-20m-to-attawfiq-micro-finance-for-microlending-in-morocco/

MicroCapital, January 27, 2014, “Citigroup Overseas Private Investment Corporation (OPIC) Lend $10m to Bank of Georgia to Support Financial Inclusion of Micro-, Small Enterprises (MSEs),”
https://www.microcapital.org/microcapital-brief-citigroup-overseas-private-investment-corporation-opic-lend-10m-to-bank-of-georgia-to-support-financial-inclusion-of-micro-small-enterprises-mses/

MicroCapital Universe Profile: Bank of Georgia
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Georgia

MicroCapital Universe Profile: International Finance Corporation (IFC) Capitalization Fund
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IFC+Capitalization+Fund

MicroCapital Universe Profile: International Finance Corporation (IFC) Asset Management Company
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IFC+Asset+Management+Company

MicroCapital Universe Profile: International Finance Corporation (IFC)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

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