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| Advans Algeria |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26430 |
| Company name | Advans Algeria |
| Country | Algeria |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Approval |
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| Date SPI disclosed | February 5, 2008 |
| Projected board date | March 17, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The proposed transaction consists of an equity investment and technical assistance funding for the establishment of a greenfield microfinance institution, Advans El-Djazair (Advans Algeria). Advans Algeria is sponsored by Advans S.A. SICAR (Advans), an investment company with the technical partnership of Horus Development Finance, an associated French consulting firm with recognized expertise in microfinance. Advans Algeria will provide credit services to urban micro and small enterprises in Algeria. It is expected after 5 years of operations that the institution will have over 24,000 clients and a portfolio of approximately EUR45 million.
The purpose of this project is to expand access to financial services to a segment that remains highly underserved by the formal financial institutions. |
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| Project sponsor and major shareholders of project company |
The project sponsor is Advans, which plans on taking a 35% stake in Advans Algeria. The other shareholders would include FMO (22.5%), Proparco (22.5%) and IFC (20%),
Advans, formerly La Fayette Investissement, was created in 2005. Its shareholders include Horus Development Finance and La Fayette Participations (the technical sponsors) and several development finance organizations with strong involvement in microfinance: The European Investment Bank (EIB), Agence Française de Développement (AFD), Netherlands Development Finance Company (FMO), KfW Entwicklungsbank (KfW) and the International Finance Corporation (IFC).
Advans Algeria is part of Advans’s strategy to invest as lead or majority shareholders in greenfield microfinance institutions in Africa and Asia and is the fourth MFI to be created in the Advans network, after Advans Cameroun, Advans Ghana and Advans Congo. |
| Total project cost and amount and nature of IFC's investment |
The total project cost is estimated to be approximately EUR47 million over 5 years, consisting of EUR9 million of equity (EUR7 million initially with a EUR2 million capital increase in year 4), EUR38 million of commercial borrowings.
The proposed IFC investment consists of an equity investment of up to DZD133 million Algerian Dinars (currently EUR1.4 million equivalent) and technical assistance funding. |
| Location of project and description of site |
| Advans Algeria will focus on micro and small enterprises in urban areas, starting in the capital, Algiers, and thereafter expanding to Oran and Constantine. |
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| Anticipated development impact of the project |
The creation of Advans Algeria will have a high developmental impact in the following areas:
- Access to finance:
Advans Algeria will provide access to finance to small and medium enterprises, which have limited access to the formal financial sector.
- Financial sector development:
The establishment of a professionally managed financial institution to serve micro and small businesses will contribute to building public confidence in financial institutions and encourage more intermediaries to extend financial services to this sector
- Significant contribution to poverty reduction:
The creation of Advans Algeria will result in increasing the availability of financial services to micro and small businesses. Supporting productive small businesses will in turn stimulate equitable economic growth, employment generation and poverty reduction.
- Demonstration effects:
The project will show local banks that sound microfinance can be sustainable and generate attractive returns |
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| IFC's expected development contribution |
| IFC will play a key institution and capacity building role in supporting the creation of a greenfield microfinance institution that will provide access to finance to micro and small enterprises in Algeria. Specifically, IFC will bring its extensive microfinance expertise as well as unique combination of investment and technical assistance, which will enable the institution to jump-start and effectively scale up operations and build local management capacity. |
| Environmental and social issues - Category FI |
This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Considering the nature of activities supported, the project will be required to:
- Develop a procedure relevant to its business process, before the new company starts operations, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list.
- Identify qualified persons to manage and implement the procedure.
- Demonstrate commitment and resources to implementing the procedure.
- Submit a periodic report to IFC as per a format to be provided by IFC. |
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| For inquiries about the project, contact: |
Claude Falgon, Director and Manager
Advans SA SICAR
69, Route d’Esch, L-1470
Luxembourg
Telephone: +33 1 53 32 75 75
Fax: +33 1 53 32 75 76
E-mail: cfalgon@advansgroup.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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