36242 - HKL Senior Loan

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Summary of Investment Information

Project Number

36242

Company Name

HATTHA BANK PLC.

Date SPI Disclosed

Feb 13, 2015

Country

Cambodia

Region

East Asia and the Pacific

Projected Board Date

Mar 30, 2015

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 11, 2022

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Apr 9, 2015
Signed : May 27, 2015
Invested : Jul 20, 2015

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed project aims to provide a senior loan of up to US$10 million to a new client Hatta Kaksekar Limited (“HKL”) in order to support its growth and development, especially through mobile banking and agent model that HKL is planning to roll out.

Associated Advisory Engagement

IFC is planning to provide assistance to HKL in the development of a business strategy for agent banking. In addition IFC will support the review of HKL’s current IT platform.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

Development Impact

(i) IFC Industry Expertise: IFC''s track record in microfinance investments and related governance process, reporting and supervisory discipline will add significant value to HKL in its current phase of transforming into a regulated commercial bank.
(ii) IFC''s knowledge and expertise in mobile banking/ digital financial services: as HKL envisions mobile banking business model, IFC could, through advisory services, provide technical support in expanding its reach, promoting branchless banking in Cambodia.
(iii) Continue to improve market confidence: The IFC loan to HKL will demonstrate continued support by IFC to the development of Cambodian financial sector, which will enhance prospects of mobilizing additional long-term funding from other investors.

E&S Category Rationale / Risks and Mitigation

The proposed investment entails a senior loan to a Cambodian microfinance company (HKL) to support its growth and development and has been classified as an FI-3 project according to IFC Environmental and Social Review Procedure. Average loan size of HKL’s lending portfolio is about US$ 2500 and its borrowers are mostly individuals and households involved in agriculture, trade and commerce, service or other microbusiness activities. Its overall portfolio E&S risk is considered low. The company has developed an environmental and social management system (ESMS) to screen loan applications against an Exclusion List which is consistent with IFC’s and to assess potential E&S risks following good industry practices. The company’s HR practice is also found in line with IFC Performance Standard 2: Labor and Working Conditions. Under the proposed IFC investment, the company will be required to maintain proper capacity and continue to implement, and where needed, to improve, the ESMS to ensure its lending activities to meet the requirements of IFC Exclusion List and the applicable national E&S laws. It will also be required to provide annual environmental and social performance reports to IFC.

Contacts

For Inquiries About the Project, Contact

Mr. Rath Sarun, Chief Finance Officer
Hatta Kaksekar Limited
# 606, St 271, Phsar Doeum Thkov, Chamkamorn, Phnom Penh
Telephone: +855 23 994 304

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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.

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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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