|
|  |
| PADGO RISK SHARE |
|
| 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 | 26317 |
| Company name | Commercial Bank of Ceylon |
| Country | Sri Lanka |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Approval |
|
| Date SPI disclosed | May 15, 2008 |
| Projected board date | June 20, 2008 |
|
| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project supports the CES managed PADGO (Portfolio Approach to Distributed Generation Opportunities) project with a risk sharing facility (RSF) to assist local banks increase their exposures to renewable energy (RE) projects. PADGO’s objective is to improve access to cleaner and more reliable sources of energy for underserved populations and is currently piloted in Sri Lanka. The initial phase of the project would help Commercial Bank of Ceylon (CBCL or the Bank) to:
- free up capital for funding new RE projects, and
- consider loans for RE projects involving technologies new to Sri Lanka (including wind projects).
In addition to the investment project, there is intended to be a comprehensive technical assistance program to support the objectives of the project, which will be focused on the RE sector and participating financial institutions. |
|
| Project sponsor and major shareholders of project company |
Established in 1969, CBCL is the largest, best performing private sector bank. The Bank is also trying to increase its presence in the region by expanding to Bangladesh and the Middle East.
CBCL has no identifiable sponsor and the shareholding is diversely held among local corporates, some institutional investors and a significant number of retail investors. CBCL is listed on the Colombo stock exchange and its shareholders include DFCC Bank (DFCC), 29.8%; IFC (15%); Sri Lanka Insurance Corporation (SLIC) 9.9% and the Al Mashal Group (AIG) of Saudi Arabia, 5%. |
| Total project cost and amount and nature of IFC's investment |
| The project entails a risk sharing facility of IFC that would cover 50% of the risk of existing projects and the additional exposure up to approximately LKR 3.3 billion ($30 m). The project will help augmenting the Bank’s ability to manage risks on its renewable energy portfolio and to meet its planned growth. |
| Location of project and description of site |
| The Bank is headquartered in Colombo, Sri Lanka and provides services across Sri Lanka through a network of over 140 branches. |
|
| Anticipated development impact of the project |
- Support the construction of additional approximately renewable energy in Sri Lanka, including in newer technologies such as wind and biomass;
- Assist SMEs who typically implement renewable energy projects in Sri Lanka;
- Help contribute to reducing the reliance on expensive electricity generated from imported oil; and
- Help generate global benefits in the form of greenhouse gas emissions reduction. |
| IFC's expected development contribution |
IFC’s expected development contribution is to:
- Support the Bank’s growth into the renewable sector, especially to the newer technologies;
- Build capacity in the Bank in relation to evaluating and managing risks;
- Support best practices in the Bank. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal IFC will analyze the participating banks' portfolios and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:-
- The IFC FI Exclusion List; and/or
- The applicable Sri Lankan social and environmental Laws and regulations; and/or
- The IFC Performance Standards.
IFC will also review, if required, the capacity of the participating banks to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in each participating bank's SEMS.
Based on the review, the participating banks will be required to:
- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that the investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements;
- Submit a periodic report to IFC as per a format to be provided by IFC. |
|
| For inquiries about the project, contact: |
Mr. Naveen Sooriyarachchi, Head of Corporate Finance
Commercial Bank of Ceylon Limited
“Commercial House”
21, Bristol Street,
P.O. Box 856,
Colombo 1
Sri Lanka
Telephone:+94-11-5377881 |
|
| 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 |
|
|
|
|