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| Real Student Fin |
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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 | 25527 |
| Company name | Beneficência Médica Brasileira S.A. Hospital e Maternidade Sao Luiz |
| Country | Brazil |
| Sector | Education Services |
| Environmental category | C |
| Department | Health and Education |
| Status | Pending Disbursement |
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| Date SPI disclosed | May 29, 2007 |
| Projected board date | June 29, 2007 |
| Previous Events | Signed: March 5, 2008
Approved: February 20, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Banco Real, a leading Brazilian bank wholly owned by ABN AMRO, is developing a lending program (the Program) to provide financing to undergraduate and working adult students in Brazil. The Program is designed to increase and facilitate access to post secondary education to lower and middle income students. Banco Real approached IFC with a request to:
- assist in structuring the Program; and
- risk-share certain credit losses in excess of a pre-determined first loss amount.
The initial size of the Program is expected to be approximately R$50 million, equivalent to approximately $25 million. |
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| Project sponsor and major shareholders of project company |
| Banco Real is currently the third largest private bank in Brazil, with $36 billion-equivalent in total assets as of June 2006. The Bank has a strong position in diversified business lines and brand name recognition. Banco Real was the pioneer financial institution to explore the student segment twenty years ago, and is still the current leader with an expressive market share above 12%. Banco Real's capital adequacy ratio was 14.4% in June 2006, above Brazilian requirements of 11%. The bank also has a diversified loan risk portfolio and good asset quality ratios. As of June 2006, the Bank's NPLs (loans past due more than 90 days) represented 5.8% of its total loans and its coverage ratio was 106.2%. Net income was R$237 MM ($108MM) in 2Q`06. Net interest income reached R$1,335 MM ($610 MM - up 44% YoY) and NIM reached 10.37% in June 2006, both fueled by the increase in the loan portfolio. |
| Total project cost and amount and nature of IFC's investment |
| The initial size of the Program is expected to be approximately R$ 50 million, equivalent to approximately $25 million. IFC’s exposure is expected to be up to 45% of the size of the Program, or a maximum of R$22.5 million (equivalent to approximately $11.3 million). The student loans originated under the Program will be funded and serviced by Banco Real. Banco Real will earn interest and fees on the loans to students and will pay IFC a risk sharing fee for sharing in the risk of potential portfolio losses above a certain threshold. |
| Location of project and description of site |
| Banco Real has headquarters in São Paulo, Brazil. The Program will provide loans to qualified students enrolled in Universities throughout Brazil. |
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| Anticipated development impact of the project |
| The Program will enhance access to higher education in Brazil by supporting the development of the private sector student loan market. A well developed student loan market could help to improve equality in access to education in Brazil, by enabling middle and lower income students to finance their post-secondary education with long term loans. Improved access to student financing will be critical in realizing the enrollment expansion rates that both Government and private sector analysts expect to take place in the medium term. In addition, developing the student loan market deepens financial markets by adding a new asset class for financial institutions and investors. |
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| IFC's expected development contribution |
| IFC’s global experience in both structured finance products and post secondary education place IFC in a unique position to support Banco Real’s initiative. IFC’s participation in the Program will also increase Banco Real’s credibility with participating universities, a critical element in establishing a successful student financing program. Finally, IFC involvement should have an important demonstration effect for investors and financial institutions, showing that the education financing business can be viable and profitable. |
| Environmental and social issues - Category C |
| This project is a category C project with no expected adverse social or environmental impacts based on the environmental and social review. Therefore there will be no further environmental or social review required. |
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| For inquiries about the project, contact: |
Diretoria de Produtos – Alexandre Mouri
Banco ABN AMRO Real S/A.
Av. Paulista 1374 10o andar
01310-916 São Paulo SP Brazil
Telephone: 55 11 3174 7432
Fax: 55 11 3174 6234
Website: http://www.bancoreal.com.br
E-mail: alexandre.mouri@br.abnamro.com |
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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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