MICROCAPITAL BRIEF: IDB Invest, DFC, FinDev Canada Loan $390m to Davivienda of Colombia for SMEs, Environmental Sustainability, Women

IDB Invest, a member of the US-based Inter-American Development Bank (IDB) Group; the US International Development Finance Corporation (DFC); and FinDev Canada, a subsidiary of government-owned Export Development Canada, recently issued subordinated loans totaling USD 390 million to Colombia’s Banco Davivienda for repayment over 10 years. The deal will “provide new financing for working capital, capital investment and fixed assets to Davivienda clients” from the bank’s small and medium-sized enterprise (SME) and women-led SME portfolios.

Of the total amount, IDB Invest disbursed USD 20 million from the Canadian Climate Fund for the Private Sector in Latin America and the Carribean, Phase II to support firms deemed “environmentally friendly.” The agreement allows for a reduction in the interest rate that Davivienda pays if it meets various “goals and milestones related to the green portfolio and risks.” IDB Invest will support this effort by providing Davivienda with related technical assistance.

Established in 1972, Davivienda reports total assets of COP 140 trillion (USD 39 billion), a gross loan portfolio of COP 112 trillion (USD 31 billion) and deposits of COP 88 trillion (USD 24 billion) as of September 2020. The bank serves 17 million customers via 680 branches, 2,700 bank machines and online services. The parent organization of Davivienda, Grupo Bolívar, is a Colombia-based entity active in the financial, insurance and construction sectors in Colombia, Costa Rica, El Salvador, Honduras, Panamá and the US.

IDB Invest is the trade name of the Inter-American Investment Corporation. The organization focuses on promoting economic development in Latin America and the Caribbean through projects in agriculture, financial inclusion, sustainable energy and transportation. It is owned by 47 member countries. As of June 2020, IDB Invest had USD 13 billion in assets under management, deployed via 385 clients in 25 countries.

Established in 1958, IDB Group is focused on promoting “environmentally friendly” economic development via improved health, education and infrastructure in Latin America and the Caribbean. During 2019, IDB Group reports having issued USD 13 billion in loans and grants, resulting in year-end assets of USD 136 billion.

DFC was launched in 2020 to “help businesses expand into emerging markets, foster growth and improve lives in the developing world while reinforcing US foreign policy and national security interests.” The organization has an investment cap of USD 60 billion to deploy in forms such as equity placements, insurance, technical assistance and research. DFC focuses its efforts on low-income and lower-middle-income countries in areas such as “energy, healthcare, critical infrastructure and technology.” Upon its founding, DFC took over the work of the Overseas Private Investment Corporation as well as the Development Credit Authority of the US Agency for International Development.

FinDev Canada, also known as the Development Finance Institute Canada, was established in 2018 as a wholly owned subsidiary of Export Development Canada (EDC) with the goal of supporting job creation, sustainable development and the economic empowerment of women. FinDev Canada is active in the private sector in Latin America and the Caribbean as well as sub-Saharan Africa via direct loans, guarantees, structured financing and equity placements. As of December 2019, the organization reported total assets of CAD 187 million (USD 137 million).

EDC, which is owned by the government of Canada, is the country’s export credit agency, serving Canadian companies that operate across borders with trade expertise, insurance, networking, and “access to capital and credit.” EDC reported CAD 69.4 billion (USD 54.7 billion) in total assets as of 2019.

By Harriet Ritchie, Research Associate

Sources and Additional Resources

IDB Invest press release
https://www.idbinvest.org/en/news-media/idb-invest-dfc-and-findev-canada-support-sme-women-led-sme-and-green-financing-colombia

Davivienda homepage
https://www.davivienda.com

Davivienda financials as of September 2020
https://ir.davivienda.com/public/downloads/home-descargables/ingles/informacion-financiera/quarterly/2020/3-trimestre/Davivienda%20Financial%20Results%20Report%203Q20.pdf

Grupo Bolivar homepage
https://www.grupobolivar.com.co

Canadian Climate Fund profile
https://www.canada.ca/en/environment-climate-change/news/2019/06/canada-announces-new-support-for-international-climate-action-and-coal-phase-out.html

DFC homepage
https://www.dfc.gov

FinDev Canada homepage
https://www.findevcanada.ca

EDC homepage
https://www.edc.ca

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