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| CGM Leasing |
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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 | 26366 |
| Company name | Grupo Cohen |
| Country | Argentina |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pending Approval |
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| Date SPI disclosed | February 20, 2008 |
| Projected board date | March 21, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project consist of a long term dual currency (AR$-linked and US$) financing of up to US$15 million to CGM to be on-lent (via long-term leasing) to SMEs. Such financing will be structured under a Financial Trust (Fideicomiso Financiero) scheme. The project is an innovative approach to provide long term financing to smaller financial intermediaries, which often do not have sufficiently large balance sheets to meet their growing demand for credit. Such approach would be replicable to other similar financial intermediaries that face such type of constraints. |
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| Project sponsor and major shareholders of project company |
| The main shareholders of CGM Leasing Argentina S.A. are Grupo Cohen S.A. ( Cohen) with a 73% ownership, and the company’s own management, with the remaining 27%. Grupo Cohen S.A is a private Argentine financial holding, ranging from brokerage to asset management, research or M&A. |
| Total project cost and amount and nature of IFC's investment |
| The project consist of a long term dual currency (AR$-linked and US$) financing of up to US$15 million. Such financing will be structured under a Financial Trust (Fideicomiso Financiero) scheme composed of three issuances of up to US$5 million each. |
| Location of project and description of site |
| CGM Leasing is headquartered in Buenos Aires, Argentina. The company works with an extensive network of vendors across the country, and its business operations are highly diversified across the country. More specifically, about 40% of its businesses are located outside the Province of Buenos Aires, including provinces such as Santa Fe (10%), Entre Ríos (9%), and Formosa, Córdoba and San Luis (with 3% each). |
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| Anticipated development impact of the project |
The project will have a significant developmental impact in several areas related to enhancing access to finance for SMEs enabling these target SMEs to undertake their strategic capital investments, supporting economic growth and job creation, and developing the local capital markets. The anticipated development impacts of the project are:
- Enhance access to finance for SMEs;
- Promote leasing as a financing tool;
- Support the development of frontier regions of Argentina;
- Foster the development of local capital markets. |
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| IFC's expected development contribution |
IFC's additionality will arise as a consequence of the following factors:
IFC will provide peso and US$ long term funding in tenor otherwise not available in the market;
The structure of the proposed facility requires long term senior certificates (5 years life with 3 years duration). However, there is currently no market/demand for such tenor among the institutional investors in Argentina. So IFC’s participation is necessary to assure success of the overall structure.
IFC’s structuring expertise is critical for a successful securitization of these long term class of underlying assets and will facilitate CGM’s first capital markets transaction of this kind. After a track record is established, mobilizing additional investors in subsequent similar issuances is expected to be a natural step. |
| 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 analyzed the project’s business model and determined the following Applicable Requirements, based on an analysis of the potential Environmental and Social risks associated with the FI’s portfolio:
- the IFC Exclusion List, and/or
- the National Environmental and Social Laws.
Based on the Applicable Requirements, the project will be required to:
- Develop an Environmental and Social Management System (ESMS), prior to disbursement that is satisfactory to IFC, to ensure that the Company’s investments/activities are in compliance with Applicable Requirements;
- Identify responsible and qualified persons to manage the ESMS;
- Commit to implement the ESMS and take action to remedy any gaps in ESMS implementation on an ongoing basis; and
- 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: |
Alberto Beunza, President
CGM Leasing
Telephone: (54-11) 5237-4076
E-mail: abeunza@cgmleasing.com.ar |
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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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