34847 - Divitia FIM Crédito Privado

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Summary of Investment Information

Project Number

34847

Company Name

DIVITIA INVESTIMENTOS LTDA

Date SPI Disclosed

Jun 19, 2014

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Jul 23, 2014

Environmental Category

FI-2 - Limited

Status

Hold

Last Updated Date

Nov 30, 2016

Department

Regional Industry FIG LAC & EUR

Industry

Funds

Previous Events

Approved : Nov 13, 2014

Sector

Other Funds

Project Description

The proposed project involves supporting Divitia Investimentos Ltda. (the “Fund Manager”) in raising and structuring Divitia FIM Crédito Privado Fund (the “Fund” or “Project”), a credit opportunity fund (“COF”). This capital market vehicle will mobilize local institutional investors to provide financing for domestic mid-size corporates that are underserved by the local banking sector.

As part of IFC’s Capital Market Development Strategy, the project has the potential to enhance capital market development in Brazil by channeling more capital flows than in the past from local institutional investors into under developed credit markets, enhancing capital market liquidity, extending available credit tenors, and supporting further primary issuance of new credit assets as well as its secondary market in the country. The Fund can influence the local industry and set up high standards as well as performances that may consolidate the COFs as a new investible asset class for local institutional investors.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

Development Impact

The proposed Project is expected to have the following development impacts:
- Increase the Access to finance: The project will increase the access to finance to the underserved mid-size corporate sector in Brazil. The project is also expected to expand IFC current efforts in this market segment by making medium term funding available to mid-size corporates.
- Job creation: The fund will provide loans to the mid-size corporate sector, key employer in the Brazilian economy. Thus, supporting the fund in turn supports the primary drivers of job creation and growth in Brazil
- Local Capital Markets Development: The project will help deepen and strengthen local Brazilian capital markets to the benefit of local mid-size firms. The Fund Manager aims to foster industry development, improve best practices, and overall raise the profile of this investment technique in Brazil.

- Resource mobilization: IFC participation in the project and "stamp of approval" will catalyze local institutional capital into the Fund.
- Demonstration effect: Credit Opportunities Funds (COFs) are a recent phenomenon in Brazil. IFC''s investment in the fund will have a positive demonstration effect by raising awareness of a higher yielding debt asset class, potentially attracting other high performing managers to this asset class and mid-size corporate debt segment.
- Standard Setting: The Fund will adhere to World Bank / IFC E&S standards and IFC''s funds best practices, which will raise the bar for strong E&S and corporate governance practices among local institutional investors.

E&S Category Rationale / Risks and Mitigation

The project was categorized as Category FI-2 according to IFC’s Sustainability Framework. It involves an approximately US$ 40 million investment in Divitia FIM Crédito Privado. Potential pipeline consists of up to 50 mid-size corporations. Activities supported include low to medium E&S sectors such as agro-industry, real estate services, urban residential and commercial developments, medium sized manufacturing operations including as food processing, general purpose machinery and spare parts for auto industry, chemical, pulp and paper, textile and metallurgy.

The key risks and impacts derive from the Fund’s capacity to implement a robust management system able to identify and manage the potential environmental and social risks associated to sub-projects. Currently the Fund counts with a basic ESMS. As part of IFC’s investment, the system will be enhanced in line with the IFC Exclusion List, Brazilian E&S country regulations and the IFC Performance Standards.

Contacts

For Inquiries About the Project, Contact

Mr. Sérgio Ribeiro da Costa Werlang
Founding Partner
Divitia Investimentos Ltda.
Rua do Mercado, nº 7, 3º andar, parte
Centro - Rio de Janeiro – RJ, CEP: 20010-120, Brazil

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Description	Anticipated Completion Date
Nominate E&S Officers/Department	07/31/14
Establish an ESMS including guidelines for its implementation	07/31/14
Implement Staff Training	07/31/14

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