32141 - Prasac Snr Loan

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Summary of Investment Information

Project Number

32141

Company Name

PRASAC MICROFINANCE INSTITUTION PLC

Date SPI Disclosed

Apr 27, 2012

Country

Cambodia

Region

East Asia and the Pacific

Projected Board Date

May 28, 2012

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jun 4, 2012
Signed : Jun 14, 2012
Invested : Jul 27, 2012

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The Project is to provide a senior loan to Prasac MFI Ltd. (“Prasac”/ the “MFI”), a growing MFI in Cambodia, to support them in providing micro finance solutions to over 126,000 small businesses and individuals (over half which are women) in Cambodia. Through this project, we aim to support the MFI’s the long-term fund raising strategy and also set a positive demonstration impact for other lenders to do the same.

The proposed project consists of a senior loan of up to US$5 million with maturity of up to 7 years (grace period of up to 3 years). The loan aims to help Prasac support its loan growth which has been steadily increasing.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	5.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

- Increasing access to credit: The proposed investment in Prasac is expected to improve access to credit in Cambodia as it will enable Prasac MFI to provide credit to underserved micro finance and retail borrowers.
- Specific indicators that will be used to monitor the development impact of the Project include: growth in portfolio; growth in number of borrowers; growth in number of women borrowers; ROE & EROE, outreach indicators (branches).

- Supporting growth of micro finance sector: the Project is expected to support growth of micro finance sector in Cambodia through providing capital to one of the largest MFI to enable its growth plan.
- Enhancing of long-term capital base: By providing long-term funding - which is scare in Cambodia, the Project significantly increase Prasac''s long-term capital base.
- Demonstrating effects: as a result of the global crisis, capital becomes scare in Cambodia, IFC''s investment in Prasac is expected to have demonstration impacts that enable other well-managed and better performing bank to raise their needed capital from foreign investors.

E&S Category Rationale / Risks and Mitigation

This transaction involves provision of a senior loan to Prasac MFI Ltd, a micro finance company that provides small loans with average size less than US$ 2,000 to small groups and individuals in businesses such as crop production, transportation equipment and service, construction, livestock raising and trade of consumer goods. The overall portfolio risk of the company is considered to be low and the project has therefore been categorized as FI-3 in accordance with IFC’s Environmental and Social Review Procedure. Prasac MFI Ltd will be required to screen loans against the IFC Exclusion List and the Cambodia applicable environmental and social laws and regulations, and will also be required to demonstrate that its labor practices are consistent with IFC Performance Standard 2: Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

c/o Mr. Sam Senacheert
President and CEO
Prasac Microfinance Institution Limited
No. 25 At 294 & St 57 Boeung Keng Kang I
Khan Camkarmon, Phnom penh
Kingdom of Cambodia
Tel: (855) 23 220 102 Fax: (855) 23 216 362

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