The International Finance Corporation (IFC), a member of the World Bank Group, will invest USD 33 million in return for a nine percent stake in Centro Financiero BHD, a financial services holding company in the Dominican Republic.
The investment will help BHD boost the slate of offerings of its twelve subsidiaries, including small-and-medium-enterprise (SME) loans, microfinance, remittances, and insurance. BHD subsidiaries also offer wholesale banking, pension fund administration, and asset management services.
The announcement signals the continuation of a relationship begun in 2003, when the IFC provided USD 20 million of quasi-equity financing to subsidiary Banco BHD for the expansion of its capital structure and long-term middle-market lending.
The IFC has been a part of some notable microfinance deals so far this year, including a collaboration with Citigroup to lend USD 22 million to non-profit BRAC of Bangladesh, a USD 20 million loan to Banco Ficohsa of Honduras, and a USD 50 million investment in consumer finance company Micro Provident Botswana.
Established in 1956, the IFC is a multilateral institution within the World Bank Group based in Washington, DC. It seeks to promote sustainable private sector investment in emerging economies worldwide. As of March 2008, the IFC has a committed portfolio of USD 272 million in the Dominican Republic. As calculated from its 2007 financial statements, its return on assets was 6.46 percent, and its debt-equity ratio was 186.98 percent.
Centro Financiero BHD, which includes the Dominican Republic’s third largest bank, began as Banco BHD in 1972 to support the fledgling Dominican construction industry and grew to become a provider of integrated financial services to various sectors of the economy. As of December 31, 2007 (financial statements), it had total assets of DOP 61.9 billion (USD 1.9 billion) and return on assets of 2.36 percent. Its debt-equity ratio was 747.97 percent. As for ratings, BHD does not report a third-party performance evaluation of operations to the MIX Market, the microfinance information clearinghouse.
By Stephen Son
Business News Americas: “IFC invests US$33mn for BHD stake”
IFC: “IFC Investment to Boost Access to Finance in the Dominican Republic”; Financial Statements 2007
MicroCapital.org article, February 25, 2008: “Citi teams with IFC to Support Expansion of BRAC Microlending in Bangladesh with USD 22M, Part of USD 55M Financing Deal”
MicroCapital.org article, February 22, 2008: “International Finance Corporation (IFC), a Member of the World Bank Group, to Lend $20m in Debt and Invest $400k in Advisory Services to Banco Ficohsa of Honduras”
MicroCapital.org article, February 5, 2008: “International Finance Corporation (IFC) Invests $50m in Consumer Finance Company Micro Provident Botswana (Letshego)”
MIX Market: Profile for IFC
Banco BHD: ¿Quiénes somos?; Estados Financieros Centro Financiero BHD Diciembre 2007 (Spanish)
Oanda: FX Converter
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