35061 - DARP New Credit II

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Summary of Investment Information

Project Number

35061

Company Name

DARP SPV NEW CREDIT II

Date SPI Disclosed

Aug 1, 2014

Country

Colombia

Region

Latin America and the Caribbean

Projected Board Date

Sep 15, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Oct 14, 2014
Signed : Nov 5, 2014
Invested : Nov 26, 2014

Sector

Distressed Assets SPV

Project Description

The existence of a strong Distress Assets (“DA”) market constitutes an important element contributing to the appropriate performance of the financial industry in any economy. In this context, the proposed project is part of IFC’s program to promote the development of a DA market in the Andean region. To achieve this, IFC would be partnering with Covinoc (the “Company”), an IFC existing client to acquire Non-Performing Loan portfolios in the previously mentioned markets.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

Development Impact

- Allow banks in Colombia and Peru to offload their NPLs, and therefore improve their liquidity and capacity to originate new loans.
- Through the appropriate resolution of NPLs, the project would allow a large number of individuals to be able to avoid losing their assets (their homes in most cases) and ultimately to re-enter the banking system.
- The proposed investment would contribute to the further development of the distressed assets market in Emerging Markets, resulting in an increase of both the number of NPL transactions and the players in this market.

Liquidity: IFC would enable further private sector investment in the distressed assets sector, providing liquidity, which is scarce for these types of investments.
Market Support: The vast number of opportunities for distressed assets investments in the United States and Western Europe is significantly crowding out other regions, including Latin America. IFC''s participation in the project would send a strong signal to the market. This would significantly support the appropriate evolution of the regional distress assets market, and contribute to the stability of the financial industry.
Local Knowledge: IFC has been active in the region''s market and is familiar with the players and the regulatory environment. IFC can leverage on its client network significantly increasing Covinoc''s ability to source deals.

E&S Category Rationale / Risks and Mitigation

This Project involves the creation of a Special Purpose Vehicle (SPV) to purchase and service portfolios of non-performing loans in Colombia and Peru. The servicer is an existing IFC client with an Environmental and Social Management System (ESMS). The prospective portfolios are similar in nature to the ones currently managed by the servicer and are likely to have similar Environmental and Social (E&S) risks. These risks are considered to be generally low, although some assets and commercial entities with which the company works may have or face E&S risks. The project has therefore been categorized as FI-2 according to IFC’s Sustainability Framework.

Task Title & Description	Anticipated Completion Date
Nominate officers	09/30/2014
Formalize procedures	09/30/2014
- Provide details on training conducted for ESMS implementation (not for CSR initiatives) - Provide contact of the ESMS Officers for New Credit and Patrimonio Autonomo Conciliarte, once they are designated - Send the top 20 outstanding balances for commercial assets	09/30/2014

Contacts

For Inquiries About the Project, Contact

Ms. Catalina Villa
Covinoc S.A.
Carrera 11 #87-51 Piso 2.
Bogota
Colombia
Tel: +576338888
Fax: +576338888
http://www.covinoc.com

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Local Access of Project Documentation

N/A.

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.

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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.

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