HELP - Haiti Emergency Loan Program

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

29476

Company name

INTERNATIONAL FINANCE CORPORATION(IFC)

Country

Haiti

Sector

Other

Environmental category

Department

Reg Ind, Financial Markets, CAF/CLA

Status

Pending Signing

Date SPI disclosed	February 4, 2010
Projected board date	February 22, 2010
Previous Events	Approved: February 26, 2010

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Given the need for an urgent response to the earthquake crisis in Haiti, IFC has waived the 30-day disclosure period of the SPI prior to submitting this Project to the Board.

The Haiti Emergency Loan Program (HELP) is the first stage in IFC’s investment response to the devastating earthquake in Haiti. It consists in a program of emergency loans to existing portfolio clients and to two strategic clients with which IFC had advanced relationships before the earthquake.

The purpose of these loans will be to rehabilitate these clients in order to ultimately benefit MSMEs, create jobs, restore power supply and sustain a food pipeline.

Project sponsor and major shareholders of project company

HELP envisages extending loans to six clients in four different sectors of the economy, namely: manufacturing, agribusiness, power and financial sectors.

Grupo M is a Dominican Republic (DR) based textile company, which has operations in DR and in Haiti. Fernando Capellan is the founder of Grupo M. He and others businessmen are the controlling shareholders who together with other senior management officials hold 82% of the capital. Banco popular, the largest financial group in the DR owns 10% of the company.

Brasserie National d’Haiti (Brana) is Haiti’s leading beverage company engaged in the production and marketing of beer, non-alcoholic energy drinks, carbonated soft drinks, flavored drinks, bottled water and milk-based product. Brana was founded in 1973 and is currently owned by six branches of the Madsen family, a Haitian business family (63%); Heineken International (22%), Desnoes & Gedded (6%) and Mr. Alvin Chapman, a Jamaican individual (9%).

E-Power is a 30MW independent power producer ("IPP") project under a long-term power purchase agreement with the state-owned utility, EDH. It is the first internationally-financed private-sector power project in the country. The sponsor is a group of local Haitian businessmen and a East-West Power of Korea, one of the six subsidiaries of the state-owned electricity utility, Korea Electric Power Corporation ("KEPCO") in Korea.

Sogebank is a commercial bank with activities spanning retail and corporate businesses, microfinance, remittance distribution and factoring. The bank has currently the largest distribution network in the country and is a leading bank with market shares of 30% and 34% in loans and deposits respectively. Sogebank has over 125 shareholders, with ten families owning more than 60% of the capital. The three largest individual shareholders are Jean-Claude Nadal (9.2%), Pascale & Ralph Delain (6.4%) and Roger Jaar (5.2%).

Capital Bank is a universal bank and its main business line is commercial lending to SMEs. The bank is currently ranked 5th in Haiti. Capital Bank has about 394 shareholders, with no single shareholder owning more than 20% of the shares. The nine members of the Board of Directors own almost 40% of the bank.

ACME is one of the leading microfinance institutions in Haiti. It operates in metropolitan area of Port-au-Prince and its core clientele consists of urban micro-entrepreneurs. ACME finalized its transformation from NGO to a joint stock company in July 2009. Initial shareholders include ACME the founding NGO, Incofin, 3 private individual investors and FIE NGO, the founder of FIE FFP in Bolivia, a leading Bolivian microfinance institution.

Total project cost and amount and nature of IFC's investment

The proposed IFC investment would be up to $35 million. No individual client will receive more than $10 million.

Location of project and description of site

HELP will provide financing to companies operating in Haiti.

Anticipated development impact of the project

The Program will contribute to the rehabilitation efforts in Haiti by providing financing to key private sector players. Specifically, the Program will achieve the following:

(i) Resumption of operations/production in real sector: IFC will help companies resume operations and employment of its staff and increase production, thereby supporting the country's economic recovery;
(ii) Resumption of operations in financial sector: The financial sector, concentrated in the capital city, Port-au-Prince, has been particularly hard hit in terms of physical infrastructure and human resource and IFC's investment will help financial institutions resume normal operations;
(iii) Assist in the restoration of electricity supply in the capital city, Port-au-Prince; and
(iv) Provide access to finance: IFC will support financial institutions by providing them long-term funding, which in turn can be on-lent to micro, small and medium enterprises to help them repair damages and restart their business, thereby increasing economic activity and creating jobs.

IFC's expected development contribution

i) Response to earthquake crisis: HELP is one part of IFC's response to the earthquake. IFC will provide long-term financing to help Haiti rebuild its infrastructure and economy.
ii) Show of confidence: IFC's investment will signal confidence in Haiti which has suffered major damage as a result of the earthquake but which also has been adversely affected by the financial and food crisis and four hurricanes in 2008.
iii) Comfort to the Sponsors: IFC's Program will provide comfort to the sponsors of each individual projects.
iv) Overall Support: Through its expertise and experience in the manufacturing, agribusiness, power and financial sectors, IFC will be able to support these key sectors of the economy through investments and advisory services and therefore support a unified economic recovery.

Environmental and social issues - Category C

Environmental and Social Considerations: The proposed Project is structured as an investment program that will be treated as an Environmental Category C project. However, the identified projects ("Sub-Projects") to be supported under HELP are expected to have environmental and social risks and impacts consistent with either FI or Category B projects, or less likely, Category A.

Given existing travel restrictions and the need for expedient processing of the sub-projects, IFC’s review of E&S risks will focus on what is already known about each individual project due to previous client engagement and appraisal activities, complemented by desktop reviews as necessary. Project-specific requirements and timelines for achieving compliance with IFC Performance Standards will be defined through legal documentation according to existing procedures.

IFC disclosure of E&S review of each sub-project will be conducted as soon as it is practical.

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