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| This Summary of Project Information 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. |
Summary of Project Information (SPI) |
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| Project number | 10634 |
| Project name | Karafarin Leasing Company |
| Country | Iran, Islamic Republic of |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Karafarin Leasing Company |
| Environmental category | FI |
| Date SPI disclosed | May 10, 2002 |
| Projected board date | July 9, 2002 |
| Status | Completed |
| Previous Events | Signed: March 10, 2005
Approved: December 19, 2002 |
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| Project sponsor and major shareholders of project company |
The project sponsors are, Karafarin Bank and Natexis Banque Populaires, each with a 40% equity stake in Kafarin Leasing Company (KLC or the company).
Karafarin Bank (KB) - Local Sponsor
Karafarin Bank (KB) was established on December 8, 1999, as Karafarinan Credit Institution (KCI). It was one of the first private non-bank financial institutions to be licensed after the Revolution. In line with the government’s reform program to permit private commercial banks, it was licensed to operate as a full-fledged commercial bank on December 26, 2001. KB is one of three recently established institutions providing commercial banking services in Iran. It is owned by a diverse group of Iranian businessmen with interests in mining, construction, transportation, office equipment, ceramics, energy, and consumer durables.
Natexis Banque Populaires (NBP) - Technical Partner
NBP is one of the largest financial institutions in France. It is a listed company on the Paris Stock Exchange whose majority shareholder is the Banque Populaires Group. NBP is the result of the progressive integration of Credit National, Banque Francaise du Commerce Exterieur (BFCE), and the main activities of Caisse Centrale des Banque Populaires (CCBP). Including its subsidiaries, NBP has almost 7,900 employees, it has a strong commercial position in France, especially with medium and large businesses. |
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| Total project cost and proposed IFC investment |
| The company would be capitalized at US$10 million equivalent. It is proposed that IFC invest up to US$2 million in KLC's share capital for a 20% ownership, in addition to a loan of up to US$3 million. |
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| Location of project and description of site |
| The company would be headquartered in Tehran. |
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| Description of company and purpose of project |
The project consists of structuring and establishing a joint venture leasing company in Iran: Karafarin Leasing Company. The company would focus on medium-term equipment leases. Particular emphasis would be given to servicing the needs of small and medium enterprises (SMEs). This project has been conceived in response to the shortage of term finance to the private sector in Iran and would have a significant impact on developing the leasing industry. Leasing would provide an alternate source of term finance to ultimately assist the expansion of a sustainable private sector in Iran.
IFC Role
IFC has been the primary catalyst throughout the development of this project.
* IFC was active in identifying leasing as an appropriate instrument to address the financing needs of the private sector, particularly SMEs. * IFC played a major role in structuring the project, in attracting an international financial institution as the foreign technical partner and a local bank as the local sponsor.
* IFC would play an important role in helping the company develop best practices through its ongoing association with the company.
* The government and the World Bank Group expect the demonstration effect of this project to lead to the development of a healthy and competitive leasing sector in the country, and indirectly result in a much larger developmental outcome.
* Finally, IFC's involvement in the project is a source of comfort to the parties in the venture and should play an important role in mobilizing domestic financing.
Development Impact
The developmental impact of the project is expected to be broad.
* Impact on private sector development: Term financing to the private sector in Iran is scarce. The project will be an important source of medium-term funds for the private sector, particularly SMEs. This source of financing will support private sector and SME growth, which is expected to boost job creation.
* Impact on the financial sector: By introducing a well-managed equipment leasing company, the project will help strengthen the leasing industry in Iran, and contribute to the deepening of the overall financial sector. The leasing industry is still under-developed with only a few companies conducting small operations. The entrance of a well-managed leasing company, with an international technical partner, into the market, coupled with assistance in establishing a legal and regulatory framework for leasing, is expected to promote industry growth and increased competition in the financial sector. The project will introduce new technology, know-how and skills transfer through the technical partner - Natexis Banque Populaires (NBP). |
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| Environmental and social issues - Category FI |
This is a FI Type 1 project according to IFC's environmental and social review procedure. KLC will be required to develop an environmental management system requiring leased assets under relevant operations to be operated in compliance with the environmental, health and safety requirements of Iran. KLC will be required to participate in environmental training and must provide IFC with an annual environmental performance report.
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| To contact the project company, please write to: |
Dr. Parviz Aghili, Managing Director
Karafarin Bank
6 Ahmad Ghassir Street
Tehran 15137
Iran
Phone: 98-21-871-5268
Fax: 98-21-855-0291 |
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