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| Banco CR2 Medium-Sized Enterprises FIDC |
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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 | 26493 |
| Company name | Banco CR2 Brokerage Firm |
| Country | Brazil |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Pend FAP |
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| Date SPI disclosed | March 21, 2008 |
| Projected board date | April 21, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
IFC will purchase up to BRL 70 million in FIDC quotas, alongside Banco CR2’s (BCR2, the Bank) investment of BRL 30 million in subordinated quotas. The FIDC will utilize these funding proceeds to invest in Cedulas de Credito Bancario (CCB) transactions originated by the Bank. The purpose of successful completion of this first phase will be to establish an operational track record for the FIDC. It is envisaged that in a second phase, senior quotas benefiting from a credit enhancement provided by IFC (in addition to subordination provided by BCR2) will be issued in the market.
The project is part of IFC’s securitization strategy in Brazil, which aims to stimulate capital markets development, as well as access to finance for individuals and corporates who have difficulties obtaining credit resources on their own – either from banks or the capital markets. |
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| Project sponsor and major shareholders of project company |
| Banco CR2 was created in 2000 by five executives from Banco BBM, who in 1999 left BBM to start the CR2 brokerage firm. BCR2 focuses on middle-market lending, with related activities in consigned credit and fund management. The Bank is still relatively small, but has a growing presence in the middle market and the related credit expertise required for this segment. It tends to focus on providing credit to suppliers of large energy companies/complexes, and therefore has developed good credit underwriting capacity in energy-related sectors. In its headquarters in Rio, it has a total of 9 directors and 52 employees. The Bank is in the process of opening satellite offices to originate further business. |
| Total project cost and amount and nature of IFC's investment |
| The proposed investment consists of a purchase of FIDC quotas (whose underlying assets will be CCBs) in an amount of up to BRL 70 million. |
| Location of project and description of site |
| The Bank is headquartered in Rio, and most of its activity today is located in the states of Sao Paulo and Rio de Janeiro. The Bank is in the process of opening satellite offices to originate further business. |
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| Anticipated development impact of the project |
It is expected that the project will have a significant developmental impact in several areas:
- make increased amounts of capital markets funding available to medium-sized enterprises (MSEs) in Brazil;
- promote capital markets development by improving the attractiveness of the various asset classes for investors and issuers; and
- support the capital markets-related operations of small-sized Brazilian bank such as BCR2. |
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| IFC's expected development contribution |
In addition to making financial resources available to the project, IFC’s participation will also have the following beneficial consequences.
- Stamp of approval:
Giving overall credibility to the FIDC’s fund-raising and financing efforts.
- Assuring international best practices:
This will be one of the first transactional efforts of this nature undertaken in Brazil. As such, it would benefit from IFC’s assistance in making sure that it conforms to international best practices.
- Local investor education:
IFC's presence in the transaction is considered critical by the project sponsor, in order to provide investors with additional comfort concerning the proposed structure. |
| Environmental and social issues - Category FI |
This project has been provisionally classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze BCR2's portfolio and the MSE loans to be supported with IFC financing for types of transactions, size, tenor and industry sectors, and determine the Applicable Performance Requirements, if any, that would include a combination of the IFC FI Exclusion List, the applicable National Social and Environmental Laws and regulations, and/or IFC Performance Standards. IFC will also review if required, the capacity of BCR2 to manage social and environmental risks, and to establish and maintain a Social & 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 Social & Environmental Management System (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 investments/activities supported by IFC financing are in compliance with Applicable Performance Requirements.
- 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: |
Osvaldo Pires, Director
Rua do Mercado, 11 / 17th and 24th floor –
Rio de Janeiro – RJ, Brazil
+55-21-3806-2901
+55-21-2141-2901 |
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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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