33643 - TRM Convertible Loan

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Summary of Investment Information

Project Number

33643

Company Name

TUBA RAI METIN

Date SPI Disclosed

May 3, 2013

Country

Timor-Leste

Region

East Asia and the Pacific

Projected Board Date

Jun 13, 2013

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Jun 11, 2022

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jun 13, 2013
Signed : Jun 27, 2013
Invested : Jun 11, 2014

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

IFC proposes to invest in Tuba Rai Metin (“TRM” or the “Company”), a leading NGO micro finance institution (“NGO MFI”) in Timor-Leste, which provides inclusive financial services primarily to poor rural Timorese women and small businesses. TRM’s mission is to provide Microfinance and allied services for large number of the poor in a sustainable and regulated manner to improve the quality of lives of families and empower women.

TRM has 7,513 clients as of December 2012 with a strong gender focus with more than 90 % of the clients being women. On lending side, TRM offers two group loans: small group loans and larger group loans with longer terms. It also offers two individual business loans targeting microenterprises and SMEs. These loans are collateral free with monthly repayments. In addition, it offers motorbike loans, agriculture loans (short-term and long-term), and house improvement loans and is planning to launch energy loans. On deposit side, TRM provides voluntary demand savings account, and compulsory deposit guarantee. It also offers micro insurance.

The proposed project intends to support and facilitate the expansion and commercial transformation of TRM into an Other Deposit Taking Institution (“ODTI”) under the new regulation issued by Banco Central de Timor-Leste (“BCTL” or the “Central Bank”) in January 2011 as an entry route for non-regulated MFIs to transform into regulated formal financial institutions.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	0.50
Equity

Development Impact

1) Longer-term funding: The convertible loan would provide longer term funding which is currently scarce in the Timor-Leste market.

2) Support the transformation: Provision of the proposed convertible loan would endorse IFC''s support and commitment towards TRM''s efforts to transform into a commercial microfinance entity as an ODTI. It sends a signal about IFC''s keen interest in ultimately becoming a shareholder in TRM when it is ready.

3) IFC industry expertise (investment and advisory for commercial MFIs): IFC''s track record in microfinance investments and related governance processes, reporting and supervisory discipline will add significant value to TRM in its current phase of organizational change. This will also have a strong demonstration effect in the market which is moving its microfinance industry to a regulated environment. The initiative will be built on IFC''s global expertise in NGO MFI transformation and supported through a comprehensive Advisory Services program underway with TRM.

E&S Category Rationale / Risks and Mitigation

This transaction involves a three year loan facility to TRM, a micro finance company that provides loans to individuals with average size of circa US$ 700. 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. For this project, TRM will be required to screen loans against the IFC Exclusion List and the National 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

Angelo Soares
mailto:soaresangelo.kif@gmail.com

Tuba Rai Metin
Next to New Embassy of China,
Aitarak Laran,
Dili (Timor-Leste)

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