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| Daycoval II |
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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 | 26080 |
| Company name | Banco Daycoval S.A. |
| Country | Brazil |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | September 18, 2007 |
| Projected board date | October 31, 2007 |
| Date revised SPI disclosed | October 17, 2007 |
| Previous Events | Invested: December 11, 2007
Signed: November 27, 2007
Approved: November 16, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Established as a multiple bank in 1989 and listed at Bovespa stock exchange since June 2007, Banco Daycoval S.A. (Daycoval or the Bank) is one of the leading mid-sized Brazilian banks operating in the middle market segment. Daycoval had more than 2,000 active SME clients and assets of R$ 5.1 billion as of June 2007.
The project involves the subscription by IFC, through private placement, of a cross-border, local currency-denominated note for an amount up to $30 million-equivalent. The project also includes a B loan, for an amount of up to $70 million. The Note and B loan proceeds will be used by the Bank to expand its lending activities involving SME companies, with emphasis on those located in the less developed regions of the country. |
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| Project sponsor and major shareholders of project company |
| Daycoval was founded by the Dayan family which still owns 71% of the capital of the bank and holds 100% of the voting shares, directly controlling the Bank. The remaining 29% of the bank’s capital is publicly traded at Bovespa Stock exchange, since June 2007. |
| Total project cost and amount and nature of IFC's investment |
| The proposed investment entails: - an up to $30 million-equivalent local currency-indexed note issued by the Bank and subscribed by IFC; - a $70 million B-Loan, which IFC would syndicate to international banks and hedge the resultant USD exposure for the Bank; and - an up to $5 million exposure related to the currency hedge. |
| Location of project and description of site |
| Daycoval is headquarted in São Paulo, Brazil. The sales teams are distributed trough 21 branches in 13 states, providing coverage for a wide range of small and middle market businesses in Brazil. |
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| Anticipated development impact of the project |
| Daycoval has expertise in credit operations secured by collateral, particularly involving SME borrowers. The Bank has been presenting a strong growth in its credit portfolio in the last years and is expanding its operations into less developed regions of the country. The project will help the Bank to continue its geographic expansion to regions outside the São Paulo financial hub. The two major development impacts embedded in this project are, making additional credit resources available to the underserved SME segment in less developed regions of the country and helping maintain a competitive environment in the concentrated Brazilian banking sector. |
| IFC's expected development contribution |
| Long-term local currency funding, which will help the bank diversify its funding base and expand its operations in an underserved segment of the market. |
| Environmental and social issues - Category FI |
During appraisal, IFC will analyze the FI portfolio and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Requirements, if any, that would include a combination of:
- The IFC FI Exclusion List(s) and/or
- The applicable National Environmental and Social Laws and regulations and/or
- The IFC Performance Standards
IFC will also review, if required, the capacity of the FI to manage environmental and social risks and to establish and maintain a social and environmental management system (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the project 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 its investments/activities supported by IFC financing are in compliance with the Applicable Requirements
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis
- 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: |
Laercio Schulze
Av. Paulista, 1793
São Paulo – SP, Brazil
Phone: +55 11 3138-0472
Fax: + 55 11 3138-0757 |
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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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