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| Ideal Invest |
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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 | 22497 |
| Company name | IdealInvest |
| Country | Brazil |
| Sector | Education Services |
| Environmental category | C |
| Department | Health and Education |
| Status | Pending Disbursement |
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| Date SPI disclosed | September 5, 2008 |
| Projected board date | October 31, 2008 |
| Previous Events | Signed: November 9, 2009
Approved: October 9, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Ideal Invest (Ideal) recently started providing students with access to loans to finance college tuition. Ideal funds these loans in the capital markets through securitizations. The Crédito Universitário Fundo de Investimentos em Direitos Creditórios (FIDC), a vehicle established by Ideal with the sole purpose of buying the student loans originated by financial institutions, issues senior and subordinated securities to fund these purchases. Local investors buy the senior securities and Ideal buys the subordinated securities issued by the FIDC.
Ideal plans to increase its student loans program to approximately R$480 million (approximately $300 million) over the next several years. As the company plans to accelerate the growth of its student loan portfolio, it has asked IFC to provide a credit enhancement to the senior securities in the form of an irrevocable guarantee to buy mezzanine securities, in an amount up to R$60 million (approximately $37 million) in case certain events occur. Combined, the subordinated and IFC’s guarantee to buy mezzanine securities should provide senior investors with sufficient subordination. |
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| Project sponsor and major shareholders of project company |
Created in 2001, Ideal started operations providing funding for universities through acquisitions of university-owned tuition receivables. In late 2006, the company launched its student lending product called “Pravaler” to provide students access to loans to pay for tuition at private universities. Today, the company is the largest private provider of student loans in Brazil, working with 110 universities in 14 states.
Some of Ideal´s shareholders include its CEO as well as some of Brazil’s leading investment firms. |
| Total project cost and amount and nature of IFC's investment |
| As Ideal Invest plans to accelerate the growth of its student loan program, it has asked IFC to provide a credit enhancement to the senior securities in the form of an irrevocable guarantee to buy mezzanine securities in an amount up to R$60 million. IFC will be committed to buy mezzanine securities in case certain events occur and the FIDC is not able to make certain payments to senior investors. Before activating IFC’s guarantee, Ideal will maintain a minimum subordination level by purchasing subordinated securities. Initially, the junior securities purchased by Ideal and IFC’s guarantee to buy mezzanine securities will provide the senior securities with sufficient subordination. |
| Location of project and description of site |
| Ideal is located in São Paulo, Brazil. Universities from 14 states participate in the program, with the majority of the universities located in São Paulo State, Rio de Janeiro, and Minas Gerais (second most populous state in Brazil). |
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| Anticipated development impact of the project |
The expected developmental impacts include:
- Expanding access to tertiary education for students looking for flexible and affordable financing alternatives,
- Improving efficiencies in the education system by making tuition flows more predictable for participating universities and reducing drop-out rates,
- Developing capital markets and mobilizing additional private resources in education financing, and
- Supporting the growth of an innovative local entrepreneur.
It is important to highlight that over 60% of Ideal’s student borrowers are first generation college students in their families. |
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| IFC's expected development contribution |
Without IFC’s involvement, it is unlikely that Ideal could successfully fund the FIDC as quickly due to the:
- lack of expertise in the education sector by capital markets’ participants;
- significant amount of subordination required by senior quota investors;
- unique combination of structuring and industry experience IFC brings to the transaction. |
| Environmental and social issues - Category C |
| This project involves the establishment of a financial vehicle to securitize student loans originated and serviced by IdealInvest. As such, this financial vehicle will have minimal or no adverse environmental or social impacts, and is classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required. The company will be required to inform IFC in the event of any change in business that could affect the social & environmental risks of the portfolio and commit to meeting any requirements that may arise with such a change. |
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| For inquiries about the project, contact: |
Oliver Mizne, CEO
Rua dos Pinheiros 870 40 andar
Sao Paulo SP 05422 001
+55 11 33181600 |
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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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