|
|  |
| Summary of Project Information (SPI) |
| This Summary of Project Information 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 | 24475 |
| Project name | Finans Lease AS |
| Country | Turkey |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Finans Finansal Kiralama A.S. |
| Environmental category | FI-1 |
| Date SPI disclosed | January 4, 2006 |
| Projected board date | February 6, 2006 |
| Status | Active |
| Previous Events | Invested: December 27, 2006
Signed: June 21, 2006
Approved: June 12, 2006 |
|
| Description of company and purpose of project |
Established in 1990, Finans Leasing (FL or the company) is the fourth largest leasing company in Turkey in terms of total volume of investments financed as well as the total number of contracts handled in the first three quarters of 2005, is listed on the Istanbul Stock Exchange (ISE). 51.04% of the company is owned by Finansbank, 8.21% owned by FinansInvest, and 40.75% by the public. FL is headquartered in Istanbul with a market share of 6.23%. As of September 2005 on a consolidated basis, FL had total assets of $313 million equivalent, equity of $120 million equivalent. Net leasing receivables of $188.6 million, and net income of $27.8 million. Leasing volumes in 3Q/05 was $181 million.
FL intends to utilize the facility mainly to finance small and medium sized enterprises (SMEs). The main objective of the project is to provide critically lacking long term lending to Turkey’s private SME sector. |
|
| Project sponsor and major shareholders of project company |
The major shareholder of FL is Finansbank, an IFC client. As of 3Q/05 on a consolidated basis, Finansbank had total assets of $12 billion equivalent, equity of $1.10 billion, net income of $258.1 million, with 194 branches. 55.68% of Finansbank is owned by Ozyegin Family, through Fiba Holding Group of Companies and the rest by the public. The Fiba Group is also involved in insurance, factoring, asset management, leasing and brokerage services, and owns the Marks & Spencer franchise.
Fiba Holding, the parent of Finansbank, recently retained Morgan Stanley to explore strategic options for Finansbank, including possible JV, partnership and/or equity sales. |
|
| Total project cost and proposed IFC investment |
| The total project cost is estimated at Euro 20 million loan. The facility would be for up to 6 years with a two year grace period. |
|
| Location of project and description of site |
| FL is headquartered in Istanbul, Turkey and has 11 branches. |
|
| Project Development Impact and IFC's Role |
Development Impact:
Leasing is an effective alternative source of financing to bank loans as it provides businesses with access to equipment for a relatively small up front investment and requires less collaterals compared to bank credits. This can be vital to SMEs with a few assets, and hence limited capacity to secure bank loans for fund business operations. Access to and availability of capital remains a major constraint to SMEs in Turkey. The proposed leasing facility will improve SMEs access to much needed capital while providing funding flexibility. It will also help achieve broader goals of encouraging financial sector diversification The impact indicators used to measure this will most likely be number and volume of SME leases approved, and the average size of leases.
Fit With World Bank Group Strategy and IFC Role:
The key structural and social elements of Turkey’s new economic reform program are the following:
- a strong focus on public sector reform
- establishment of a sound banking sector
- liberalization of markets for private sector led growth
The Bank’s strategic objective is to help Turkey implement fundamental reforms to reduce economic vulnerability and achieve high and stable growth, and continue the process of addressing long neglected social and environmental problems. The current Country Assistance Strategy aims at reducing the risk of reemergence of crisis and helping Turkey address the many challenges of preparing for EU membership. IFC’s strategy and program fully supports the strategic objectives of the Bank in Turkey. In the financial sector, IFC has been working with mid-sized banks to strengthen their capital structure and balance sheets, and to develop new products such as the leasing industry.
IFC has played a major role in developing the Turkish leasing industry since the mid 1980s when it assisted the drafting of Turkey’s leasing legislation and sponsored the establishment of IGFK, a joint venture leasing company. IFC has also made loans to the following leasing companies: Lending to leasing companies will help IFC meet two important objectives:
- providing financing to SMEs and
- encouraging financial sector diversification.
IFC’s role will also be to:
- alleviate the MT funding constraint for Turkish leasing companies and SME clients and
- contribute towards private sector led growth. |
|
| Environmental and social issues - Category FI-1 |
This is an FI type 1 project. Finans Leasing will be required to establish environmental and social review procedures to ensure that leased assets comply with the environmental and social requirements of the host country. IFC will assess Finans Leasing’s capacity to implement such procedures.
|
|
| To contact the project company, please write to: |
Ms. Elif Rumani
Group Manager, Finance Department
Nispetiye Caddesi, Akmerkez B Kulesi,
Kat:10, Etiler 34620
Istanbul, Turkey
Telephone Number +90-212-282 1039
Fax Number +90-212-282 1040/41 |
|
|
|