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| FactorRus |
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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 | 28037 |
| Company name | FactorRus |
| Country | Russian Federation |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Pending Disbursement |
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| Date SPI disclosed | April 8, 2009 |
| Projected board date | May 29, 2009 |
| Previous Events | Signed: November 13, 2009
Approved: November 12, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| FactorRus is a greenfield factoring company to be established in Russia by FIMBank of Malta, Transcapitalbank (TCB) of Russia, and IFC as a 40-40-20 joint venture. FactorRus will provide financing to Russian corporates (mostly SMEs) against assignment of receivables from off-takers/buyers. As a result of the global financial crisis traditional bank funding is drying up and factoring offers an alternative source of funding for local SMEs. |
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| Project sponsor and major shareholders of project company |
| IFC is an equity shareholder in FIMBank (Malta) with approximately 5% of the share capital. FIMBank specializes in factoring and other specialist trade finance products such as forfaiting. IFC completed similar factoring projects with FIMBank in India and Egypt, and FIMBank is an active participant in IFC’s Global Trade Finance Program. The other founding shareholder is TCB, a mid-market Russian bank with a strong regional foot-print, outside the major city centers. TCB has strong SME lending and trade finance operations. |
| Total project cost and amount and nature of IFC's investment |
| Total project cost is up to $75 million. IFC would provide up to US$5 million of equity and up to US$10 million of loan funding. |
| Location of project and description of site |
| Greenfield company to be established in Russia. The company would be headquartered in Moscow and would have clients (mostly SMEs) in various parts of Russia. |
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| Anticipated development impact of the project |
| Factoring is still nascent in Russia, and the regulatory framework is developing. As a result of the current financial crisis, financing for SMEs has become scarce. Factoring can help fill the gap as it offers short-term funding. If done properly, factoring is a relatively low risk way of lending to SMEs because the funding is short-term and collateralized by receivables. In this way, developing factoring in Russia will facilitate economic growth, especially in the SME sector. |
| IFC's expected development contribution |
| IFC provides comfort to FIMBank as it enters a new market, and shares global knowledge with sponsors from similar projects in other markets. |
| Environmental and social issues - Category C |
| This project entails IFC support for factoring and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. FactorRus will be required to review potential commitments to ensure that the underlying business does not involve any activity on IFC's Exclusion List and to demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions. The project is required to inform IFC in the event of any change in nature or scope of its business or operations. |
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| For inquiries about the project, contact: |
Margrith Lutschg-Emmenegger
President, FIMBank (Malta)
Tel:+356 21 322 100 (Ext. 180)
Email: margrith.lutschg@fimbank.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 |
| Local access of project documentation |
Alina Shilova
Head, International Finance Unit
Transcapitalbank, Moscow
Tel: +7 495 797 3200 (ext. 1404)
Email: shilova@transcapital.com |
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