38101 - Vector Mezzanine Mexico Uno

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Summary of Investment Information

Project Number

38101

Company Name

MEZZANINE MEXICO UNO, S.A.P.I. DE C.V., SOFOM, E.N.R.

Date SPI Disclosed

Apr 27, 2016

Country

Mexico

Region

Latin America and the Caribbean

Projected Board Date

Jun 6, 2016

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Feb 26, 2017

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jul 7, 2016
Signed : Oct 7, 2016
Invested : Dec 9, 2016

Sector

Capital Markets Financing Company (Including Investment Banking)

Project Description

The proposed project would involve supporting Vector Partners S.C. (the “Facility Manager” or “VP”) in raising and structuring a Mezzanine Debt Facility (the “Facility” or “Project”) in the form of a co-lending agreement among Mexican and international institutional investors to provide much needed and scarce long term financing to Mexican mid-size companies.

As part of IFC’s Capital Market Development Strategy, the Project has the potential to enhance the development of the local debt capital market in Mexico by channeling capital flows from local and international institutional investors into a nascent credit asset class, such as mezzanine debt, for the benefit of mid-size companies. The Facility will provide long term mezzanine financing to mid-size Mexican companies. The project is expected to increase the access to long term finance to mid-size companies while developing a new investable asset class in the local capital market.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	22.65
Equity

Development Impact

This project is expected to have the following developmental impact:
1. Access to finance: Increase access to finance for underserved local middle size companies in Mexico.
2. Capital market development: The project will support the development of the Mexican local capital markets by aiding in the mobilization of investment from institutional investors for the benefit of middle size companies.

The proposed investment is expected to encourage institutional investors to fill a critical financing gap by providing a new source of funding to local medium size enterprises. At the same time, the Mezzanine Facility will adhere to World Bank/IFC E&S standards which will raise the bar for strong E&S best practices among institutional investors in Mexico. Finally, the project, through a demonstration effect, can also help in the development of the almost non-existent mezzanine financing market in Mexico.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of an IFC investment of up to US$24 million in a Mezzanine Debt Facility, managed by Vector Partners ('VP"), that will provide long term financing to Mexican mid-size companies. Vector Partners is not targeting any specific sector and will likely invest in manufacturing, services, healthcare and telecommunications among other sectors. The Environmental and Social (“E&S”) risks are related to the potential impacts of the Facility’s portfolio, which due to the size and likely sectors of investment are considered to be of moderate E&S risks. As such the project was categorized as FI-2 according to IFC’s Sustainability Framework. The applicable E&S requirements include the IFC's Exclusion List, the national E&S laws and regulations and the IFC's Performance Standards.

As a Mezzanine Debt Facility, the main risks are associated with Vector Partners investments, which will include investments between US$10-12 million mainly in sectors that could potentially have low to moderate environmental and social risks, including: occupational health and safety risks, supply chain risks, and air emissions. Vector will not invest in high E&S risk companies, category A projects. Additional environmental and social risks and impacts of the project derive from the capacity and systems in place to manage these risks. For this project, VP will be required to develop an Environmental and Social Management System and capacity to review all investments per the applicable environmental and social requirements and submit an annual report to the IFC. In addition, VP will be required to develop and implement an external communications mechanism and to submit the E&S Due Diligence of the first three investments, prior to approval, for review by the IFC.

S.no	Title	Anticipated Completion Date	Status
1	Nominate officers	08/31/2016	Completed
2	Establish SEMS	08/31/2016	Completed
3	Formalize procedures	08/31/2016	Completed
9	Other1 - Develop External Communications Procedure	08/31/2016	Completed

Contacts

For Inquiries About the Project, Contact

Pablo Taberna Albea
Mezzanine Facility Director
Vector Partners, S.C
Ave. Roble #565 ote. Col. Valle del Campestre
Garza García, N.L.
Telephone: +52 (81) 8318 3670
mailto:ptaberna@vector.com.mx

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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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