Transamerica

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	26406
Company name	Transportes H&H
Country	Central America Region
Sector	Transportation and Warehousing
Environmental category	B
Department	Infrastructure
Status	Active

Date SPI disclosed	November 16, 2007
Projected board date	December 17, 2007
Previous Events	Invested: April 10, 2008 Signed: March 7, 2008 Approved: February 20, 2008

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Transamerica is the largest trucking company in an otherwise fragmented market. It owns and operates trucks and trailers and owns/leases container yards in Costa Rica, Nicaragua, Honduras, El Salvador and Guatemala. It has established itself in the market as being a reliable and efficient trucking company.

The company wants to position itself as a major player ahead of the expected consolidation of the Central American trucking/logistics industry. It intends to achieve this goal by growing its business organically as well as through selected acquisitions. By being able to offer better, regionally integrated services to its customers and by improving operational parameters through economies of scale, Transamerica expects to boost profitability and grow.

The project comprises an upgrade and expansion of Transamerica’s freight hauling capabilities through purchase of trucks and trailers, the construction of logistics infrastructure, the refinancing of existing loans and selected acquisitions.

Anticipated development impact of the project

The project will have a significant development impact in Central America through:

- Demonstration effects: the project aimed at strengthening one of the few formal players in an otherwise informal sector - expected to lead to an increase in the quality and availability of services benefiting Transamerica’s customers;

- Trade and Economic Growth: Continued trade and economic growth in Central America is contingent on further investments and improvements in regional transport infrastructure and services. Transamerica's efforts are expected to result in increased efficiency and cost effectiveness of the logistics chain through

- higher freight consolidation across countries and clients; and
-higher frequency and reliability of transport services.

Such improvements will increase the competitiveness and attractiveness of Central American economies;

- The project is a South-South investment involving Nicaragua, one of the region’s poorest economies. While foreign direct investment and involvement in the Nicaraguan economy remains weak, Transamerica owns a large operation in Nicaragua and is committed to develop the business further.

IFC's expected development contribution

By investing in this project, IFC will provide:

- Mezzanine Long Term Finance and structuring advice;
- Technical Advice;
- IFC’s investment and the “stamp of approval” resulting from IFC’s structuring experience and its review of the financial, technical, environmental, social and corporate governance aspects of the project;

Transamerica values IFC’s knowledge of emerging markets, the logistics sector, the long-term perspective and time-horizon and ability to help mitigate political and/or regulatory risks over the life of the project, if needed. These attributes distinguish IFC from other financial institutions currently active in Central America and in the logistics sector.

Environmental and social issues - Category B

This is a Category B project because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. A mature, established, operating entity, Transamerica has incorporated a number of environmental and social concerns into its business processes. It has the operational and financial capacity to effectively manage environmental and social impacts from its projects mitigating potential impacts from on-going operations. Key environmental and social issues include: driver and equipment safety; labor and working conditions; hazardous materials transport safety; and waste management.

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