MICROCAPITAL BRIEF: International Finance Corporation (IFC), IFC Capitalization Fund Invest $15m in Subordinated Debt in Nicaragua-based Banco de Finanzas (BDF)

The International Finance Corporation (IFC), the private-investment arm of the US-based World Bank Group, recently announced a USD 15 million subordinated bond investment in Banco de Finanzas, a Nicaragua-based commercial bank that is a wholly-owned subsidiary of Panama-based bank holding company Grupo Banco de Finanzas. IFC will underwrite USD 3.75 million of the purchase, and the remaining USD 11.3 million will be underwritten by the IFC Capitalization Fund, an equity and subordinated debt investment fund managed by IFC Asset Management Company, a wholly-owned subsidiary of IFC. The investment is intended to “…strengthen the bank’s capital base and support growth in its portfolio for lending to small and medium enterprises [SMEs].” The terms of the bond have not been released.

As of December 31, 2013, BDF reported total assets of NIO 13.5 billion (USD 528 million), return on assets of 2.1 percent and return on equity of 22.6 percent. In the same time period, Grupo ASSA reported total assets of USD 1.9 billion. IFC has 182 member countries and reported total assets of USD 77.5 billion as of fiscal year-end 2013. IFC Asset Management Company has USD 6.1 billion in 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.

By A’kos Szebeni, Research Associate

About Banco de Finanzas (BDF)

Founded in 1992, Banco de Finanzas (BDF) is a Nicaragua-based commercial bank that provides credit cards, loans and deposit services to commercial and retail clients. BDF is a wholly-owned subsidiary of Grupo Banco de Finanzas (Grupo BDF), a Panamanian bank holding company. In turn, Grupo ASSA, a Panamanian holding company, owns 59.6 percent of Grupo BDF’s total common shares. As of December 31, 2013, BDF reported total assets of NIO 13.5 billion (USD 528 million), return on assets of 2.1 percent and return on equity of 22.6 percent. In the same time period, Grupo ASSA reported total assets of USD 1.9 billion.

About International Finance Corporation (IFC)

A US-based multilateral 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.

About International Finance Corporation Capitalization Fund

International Finance Corporation (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. The fund is managed by the IFC Asset Management Company, which is a wholly-owned subsidiary of the World Bank Group’s private-investment arm, IFC. IFC has contributed USD 1 billion for the IFC Capitalization Fund, while the Japanese government has invested USD 2 billion. As of August 31, 2013, the fund has 19 investments totaling USD 2.1 billion in a regional African bank as well as in commercial banks in Bahrain, Cambodia, Chile, Dominican Republic, Guatemala, Honduras, Malawi, Mongolia, Morocco, Nigeria, Oman, Papa New Guinea, Paraguay, the Philippines, Serbia, Sri Lanka, Tunisia and Vietnam.

About International Finance Corporation (IFC) Asset Management Company

IFC Asset Management Company LLC, a wholly owned subsidiary of the World Bank Group’s International Finance Corporation (IFC), invests third-party capital with the intention of 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.

Sources and Additional Resources:

International Finance Corporation Press Release, “IFC Invests $15 Million to Support Growth of Nicaragua’s Banco de Finanzas,” http://ifcext.ifc.org/IFCExt/pressroom/IFCPressRoom.nsf/0/9393B11AB36A34E485257CAF00521095?OpenDocument

MicroCapital, February 18, 2014, “International Finance Corporation (IFC) Capitalization Fund Loans $65m to Bank of Georgia,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-capitalization-fund-loans-65m-to-bank-of-georgia/

MicroCapital, June 7, 2013, “International Finance Corporation (IFC) Arranges $470m in Loans for Itau Unibanco of Brazil for Women Entrepreneurs, Funded by Bank of America, Bank of Tokyo Mitsubishi, National Bank of Abu Dhabi, Development Bank of Japan,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-arranges-470m-in-loans-for-itau-unibanco-of-brazil-for-women-entrepreneurs-funded-by-bank-of-america-bank-of-tokyo-mitsubishi-national-b/

MicroCapital, April 9, 2013, “International Finance Corporation (IFC), Netherlands’ Ministry of Foreign Affairs Partner with Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER) of Nicaragua to Increase Financial Access for Micro, Small Entrepreneurs,” https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-netherlands-ministry-of-foreign-affairs-partner-with-fundacion-para-el-desarrollo-socioeconomico-rural-fundeser-of-nicaragua-to/

MicroCapital, March 11, 2013, “Itau Unibanco of Brazil Commits $167m to Microloans for Urban Entrepreneurs in Concert with Business Call to Action, UN Millennium Development Goals,” https://www.microcapital.org/microcapital-brief-itau-unibanco-of-brazil-commits-167m-to-microloans-for-urban-entrepreneurs-in-concert-with-business-call-to-action-un-millennium-development-goals/

MicroCapital, June 1, 2012, “Inter-American Development Bank (IDB) Approves $10m Loan to Nicaragua’s Banco de Finanzas for Rent-to-Own Housing,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-approves-10m-loan-to-nicaraguas-banco-de-finanzas-for-rent-to-own-housing/

MicroCapital Universe Profile: Banco de Finanzas (BDF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Banco+de+Finanzas+%28BDF%29

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

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

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