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| Giros y Finanzas Compania de Financiamiento Comercial S.A. |
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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 | 26538 |
| Company name | Giros y Finanzas Compania de Financiamiento Comercial |
| Country | Colombia |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Pending Approval |
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| Date SPI disclosed | January 22, 2008 |
| Projected board date | February 22, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Giros y Finanzas (GyF or the company) is a Colombian financial institution based in Cali, Colombia. The company offers financial services under five business lines:
- distribution of remittances as agents of Western Union (with an 13% market share in Colombia);
- foreign exchange operations;
- deposits;
- maintaining a trading desk (investing excess cash to give liquidity to the institution); and
- lending.
In the latter, the company grants car loans, leasing, factoring, and other type of consumer loans to money remittance beneficiaries. The majority of this lending is directed to its own clientele, taking advantage of cross-selling opportunities. |
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| Project sponsor and major shareholders of project company |
GyF’s shareholding structure is as follows:
Banvivienda S.A. (Grupo Mundial) 51.00%
Lome S.A. 15.31%
Quinque S.A 14.04%
Procoa Ltda. 10.00%
Rodrigo Otoya Domínguez 4.31%
Diana Casasfranco de Otoya 4.31%
Carlos Eduardo Lora Rengifo 1.03%
Grupo Mundial is an emerging financial conglomerate with insurance and banking operations throughout Central America and Colombia. The Group’s main subsidiaries are Aseguradora Mundial S.A., which is Grupo Mundial’s main asset and core entity and Banco Panameño de la Vivienda S.A.
The rest of the shareholding structure is formed by local Colombian companies and individuals related to the Otoya and Lora families. They are entrepreneurs focused on projects in gasoline service stations, agribusiness, construction, real state and cattle among other private investments. Before Grupo Mundial’s acquisition they were GyF’s major shareholders. |
| Total project cost and amount and nature of IFC's investment |
The purpose of the proposed IFC investment is to support and expand GyF’s lending program focused on microfinance and lending to low income households in Colombia.
The proposed project involves a $6,000,000 loan (or equivalent peso-linked loan). |
| Location of project and description of site |
| GyF is a Colombian financial institution based in Cali, Colombia. The company is supervised by Colombia’s Central Bank and the Finance Superintence. |
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| Anticipated development impact of the project |
The development impact of IFC’s financing to GyF is expected to be high, as it will support a financial institution that provides financing to the most underprivileged in the Colombian society. The beneficiaries of these loans will be low-income households, without access to any other source of formal financial services, who will use the funds to improve their living standards.
By supporting a well-run Colombian financial institution, IFC will improve the competitive landscape of a niche player and will help to improve its overall access to capital. The proposed project is expected to have the following development impact:
- Scaling up an existing financial institution:
This project involves scaling up a company that was originally created as a distributor of remittances and now wants to evolve into a finance company catering to the poor and low income population in Colombia. With an extensive outreach program planned IFC’s financing will be leveraged to support credit growth in under served regions and if successful, it is expected that this model could be replicated in other countries.
- Extension of finance to previously underserved groups:
Low income households lack adequate sources of funding. IFC’s investment will result in increasing the availability of financial services to this large, underserved group. By improving their living standards, IFC would help to reduce the inequality among the different segments of society and reduce poverty. |
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| IFC's expected development contribution |
IFC is expected to play an important role in the project, as it will:
- Support an independent Colombian financial institution that offers financing to low income clients whom are usually underserved by commercial banks.
- Help deepen access to finance to smaller and medium sized companies, which have limited funding from large banks or the capital markets. This fits well in further developing and deepening the financial sector.
- Support diversification of funding sources, to support the company’s expansion plan and enable adequate management of the company’s asset-liability maturity mismatch. |
| Environmental and social issues - Category C |
| This project is engaged in supporting the company's consumer lending to low income households and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required. The project is required to inform IFC in the event of any change in nature or scope of its present or contemplated business or operations. |
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| For inquiries about the project, contact: |
Juan Pablo Cruz, President
Calle 4 No. 27 – 52
Cali, Colombia
Telephone: +57 (2) 685-5518
Fax: +57 (2) 680-0135 |
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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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