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| Bolivar EQ |
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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 | 26520 |
| Company name | Grupo Bolivar |
| Country | Colombia |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | November 6, 2007 |
| Projected board date | December 13, 2007 |
| Previous Events | Invested: December 17, 2007
Signed: December 14, 2007
Approved: December 13, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| Currently, the insurance companies of Sociedades Bolivar S.A. (the Group or Bolivar), Compañía de Seguros Bolivar S.A., Seguros Comerciales Bolivar S.A. and Capitalizadora Bolivar S.A. (together, the Insurance Companies), hold a number of the Group’s operating companies and other non-insurance related investments as part of their investment portfolio. In order to maximize transparency and improve corporate governance standards, while complying with local regulatory requirements, the Group has decided to eliminate all of its cross-investments and to undertake a corporate reorganization. |
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| Project sponsor and major shareholders of project company |
| Founded in 1938, Grupo Bolivar is the third largest local financial conglomerate in Colombia. The Group is a strong player in the insurance industry, with second largest market share through the Insurance Companies, and in the banking industry, with the third largest bank in Colombia, Banco Davivienda. Grupo Bolivar’s companies include strong players such as Davivienda, the Insurance Companies, Constructora Bolivar and a host of smaller entities including a mutual fund, a trust company, a stock broker and a beach resort. |
| Total project cost and amount and nature of IFC's investment |
| The proposed investment consists of an equity investment in common shares for up to $75 million to recapitalize the Insurance Companies and restore its solvency margins to their ex-ante capitalization levels (i.e., before the elimination of non-insurance related investments). |
| Location of project and description of site |
| The Insurance Companies are headquartered in Bogota, Colombia and have a presence throughout the country through agents, brokers and sales representatives at the Davivienda branches. |
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| Anticipated development impact of the project |
The potential developmental, institutional and capacity building impact of the project is high. In addition to a greater transparency, which will flow from the financial reorganization, the re-capitalization proposed for the Group will help reinforce the local insurance industry in the Andean Region and help Bolivar to be better equipped to compete.
Insurance companies have a disproportionately high impact on economies because they are necessarily large investors who directly affect the general economy through their operations. In order to settle claims that may arise, insurers invest excess premium income to build a portfolio of financial assets and income-producing real estate which can then be called upon to pay-off any future claims that may arise. Therefore, a vibrant insurance industry can be a reliable source of long-term capital, which is lacking in Colombia. The provision of quality insurance is therefore crucial for the development of a healthy and dynamic private sector and long-term financial markets. |
| IFC's expected development contribution |
IFC would play an important role through this project as it would:
1. Promote the development of the local capital markets.
2. Add significant value to Bolivar’s institutional structure by increasing the Group’s transparency.
3. Play an honest broker role.
4. Share regional knowledge and experience.
5. Cause a demonstration effect. |
| Environmental and social issues - Category C |
| This project entails supporting Grupo Bolivar's insurance operations and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. However, the project is required to comply with IFC's FI exclusion list for its corporate clients (i.e., the Insurance Companies shall not provide policy coverage for corporate clients which are substantively involved in these excluded activities). |
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| For inquiries about the project, contact: |
Javier Suárez
Vice President of Financial Risks
Sociedades Bolivar S.A.
Carrera 10 # 16 – 39 Piso 2 – Bogotá D.C., Colombia
Telephone: +(57 1) 220-1502 / (57 1) 341-0077 Ext. 98139
Fax: +(57 1) 243-2620 |
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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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