35994 - DARP Adamantine

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Summary of Investment Information

Project Number

35994

Company Name

ASCENDANCY CARIBBEAN I LTD

Date SPI Disclosed

Jan 11, 2016

Country

Caribbean Subregion

Region

Latin America and the Caribbean

Projected Board Date

Feb 15, 2016

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jun 24, 2016
Signed : Oct 21, 2016
Invested : Nov 30, 2016

Sector

Distressed Assets SPV

Project Description

The proposed project establishes an IFC Distressed Asset Relief Program (DARP) investment platform in the Caribbean and Central America to support the acquisition and resolution of non-performing loan (NPL) portfolios alongside of Proyectos Adamantine (“the Sponsor”), a Mexican servicer. The NPL portfolios will include mortgage and consumer loans. The project will provide a banks with an integral solution to the resolution of its NPLs by providing a programmatic approach to offloading these assets from their balance sheet through a market-based mechanism. The result will be improved liquidity to devote resources towards originating new transactions, thus increasing the credit offer.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	46.67
Equity	23.33

Development Impact

The proposed project presents IFC not only a real opportunity for an attractive return, but also the possibility of a significant development impact. Through this transaction, IFC will support the first step in establishing a platform for the resolution of non-performing loans in the Caribbean and Central America.

As financial institutions in the region increase the sale of their NPLs to independent private investors, the transparency of those institutions balance sheets should improve as these NPLs would be priced by the market. The successful implementation of the Project could foster interest of other investors, which could eventually lead to the development of the DA market in the regions.

IFC''s involvement in this program, coupled with a strong package of workout guidelines, would allow it to act positively in the market place by setting an example of a distressed asset resolution mechanism, which could promote best practice in local financial markets.

Market Support: The vast number of opportunities for distressed assets investment in the developed world, including United States and Western Europe, is significantly crowding out other regions. IFC''s participation in the project would send a signal to the market that transparent transactions are possible and that IFC is supporting the development of a critical element in the financial sector related for financial cycles. This would support the positive evolution of distressed asset market in the region.

Liquidity: IFC will provide liquidity for distressed assets investments when liquidity is scarce to non-existent for these types of investments. Accordingly, IFC would be leveraging further private sector investment in this sector.

Investor Mobilization and Market Development: IFC would play a critical role to mobilize capital from private sector into the acquisition and resolution of non-performing and under-performing assets. Currently, there aren''t that many DA investors in Caribbean and Central America as this market is still in its nascent development stage.

Workout, turnaround, advisory, sector and structuring expertise: IFC will leverage its unique experience in workout and restructuring in emerging markets.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of a $25 million equity and $50 million senior loan to a platform dedicated to acquire and service non-performing mortgage and consumer loans in Central America and the Caribbean. The platform will be managed by Adamantine, a distress assets servicer in Mexico. Because mortgage and consumer loans are considered to have low E&S risks, the project has been categorized as FI-3 in accordance with IFC’s Sustainability Framework. During appraisal IFC reviewed Adamantine’s portfolio and environmental and social (E&S) management capacity as well as labor practices. Adamantine was found to be in compliance with Performance Standards 2: Labor and Working Conditions requirements. The servicer will be required to inform IFC in the case of any change in the scope of the platform’s operations.

Contacts

For Inquiries About the Project, Contact

Antonio M Dávila
Adamantine
Insurgentes Sur 1647 Piso 5
México DF, CP 03900
Tel. (5255) 5447 8311
ad@adamantine.com.mx
http://www.adamantine.com.mx
http://www.adamantinefund.com

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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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