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| Daycoval III |
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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 | 27805 |
| Company name | Banco Daycoval S.A. |
| Country | Brazil |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | December 5, 2008 |
| Projected board date | January 8, 2009 |
| Date revised SPI disclosed | February 19, 2009 |
| Previous Events | Invested: February 26, 2009
Signed: February 19, 2009
Approved: January 8, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Established as a multiple bank in 1989 and listed at Bovespa stock exchange since June 2007, Banco Daycoval S.A. (Daycoval or the Bank) is one of the leading mid-sized Brazilian banks operating in the middle market segment. Daycoval had more than 2,000 active SME clients and assets of R$ 6.8 billion as of December 2008.
The project involves the subscription by IFC, funds managed by Cartesian Capital Group, LLC, and Wolfensohn Capital Partners, L.P. (the Investors), and members of the Dayan Family, of warrants of common and preferred shares to be issued by the Bank, through the investment by the Investors in Deposit Certificates (“CDB”) in an amount of up to BRL 400 million. The investment’s main purposes are: (a) to strengthen the funding basis of the Bank in order to enable the expansion of its credit portfolio within the middle market segment; (b) to diversify its funding sources; and (c) to enable leading global investors to hold warrants of preferred shares of the Bank. |
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| Project sponsor and major shareholders of project company |
| Daycoval was founded by the Dayan family which still owns 71% of the capital of the Bank and holds 100% of the voting shares, directly controlling the Bank. The remaining 29% of the Bank’s capital is publicly traded at Bovespa Stock exchange, since June 2007. |
| Total project cost and amount and nature of IFC's investment |
The proposed investment entails:
A subscription by the Investors and members of the Dayan family of warrants of common and preferred shares to be issued by the Bank, through the investment in Deposit Certificates (“CDB”) in an amount of up to BRL 410 million.
IFC will subscribe up to BRL 100 million equivalent. |
| Location of project and description of site |
| Daycoval is headquarted in São Paulo, Brazil. The sales teams are distributed through 27 branches in 16 states (plus the Federal District), providing coverage for a wide range of small and middle market businesses in Brazil. |
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| Anticipated development impact of the project |
| The transaction assures that Daycoval will be able to continue taking advantage of lending opportunities involving the country’s SMEs, many of whom may have faced cutbacks of credit from other banks due to the global financial crisis. Furthermore, it demonstrates that significant amounts of funding can still be raised from private sector investors for a sound, emerging markets financial intermediary. |
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| IFC's expected development contribution |
| Long-term local currency funding, which will help the Bank diversify its funding base and expand its operations in an underserved segment of the market which is particularly affected by the global crisis. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC analyzed the FI portfolio for types of transactions, size, tenor and industry sectors and determined the Applicable Performance Requirements based on an analysis of the potential Social and Environmental risks associated with the FI portfolio. The Applicable Performance Requirements are:
- The IFC FI Exclusion List and
- The applicable National Social and Environmental Laws and regulations and/or
IFC also appraised the FI’s labor practices and reviewed the FI’s existing Social & Environmental Management System (SEMS) and FI capacity to implement the same. It was found that the FI has a satisfactory SEMS and sufficient capacity to implement the same. The FI has satisfactorily informed the IFC regarding its labor and working conditions.
Based on the Applicable Performance Requirements and FI SEMS and capacity review, the project will be required to:
- Maintain its existing Social & Environmental Management System (SEMS)
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
Carlos Alberto Lazar
Av. Paulista, 1793
São Paulo – SP, Brazil
Phone: +55 11 3138-1024
ri@daycoval.com.br |
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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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