40295 - Los Heroes CL

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Summary of Investment Information

Project Number

40295

Company Name

CAJA DE COMPENSACION DE ASIGNACION FAMILIAR LOS HEROES

Date SPI Disclosed

Jan 8, 2018

Country

Chile

Region

Latin America and the Caribbean

Projected Board Date

Mar 14, 2018

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

May 22, 2025

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Mar 14, 2018
Signed : Apr 18, 2018
Invested : Jul 30, 2018

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed project (the “Project”) consists of an up to US$50 million facility to be committed in two tranches, in unidades de fomento (“UF”, Chilean inflation-indexed currency) or Chilean Pesos equivalent to Caja de Compensacion de Asignacion Familiar Los Heroes (“Caja Los Heroes”, “Los Heroes” or the “Company”), to support the Company's social credit lending program focused on low-income individuals underserved by the traditional financial system in Chile.

Founded in 1955, Caja Los Heroes is a non-profit organization. It is the third largest Caja de Compensacion in Chile with 15% market share and serving nearly 1 million members. Headquartered in Santiago, Los Heroes has the largest branch network in the Cajas industry across the 15 Chilean regions. Leveraging on this structure, Caja Los Heroes has 3 main pillars: (i) transactional business: distributing several social security benefits for the Chilean government and as required by law; (ii) social financial products: fostering financial inclusion in Chile by offering affordable financial products to mainly underserved segments of the population (low income workers and retirees); and (iii) additional social benefits: providing social benefits to their members with a focus on health and wellbeing but also education, entertainment and social initiatives.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Consumer Loans

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Summary: The most significant, expected project-level impact is derived from the increase in access to finance to low income population. Beyond the project, the main source of expected market impact is derived from market enabling foreign investors funding Cajas' business and replication effect, which in this case, promote inclusiveness and market resilience.

Project Impact Assessment: The project-level impacts are composed of the following:

Generate a demonstration effect for both the Company to improve its risk profile and for the Chilean Cajas sector as a whole, enhancing investors' confidence in the Cajas sector.
Enhance access to finance for low-income individuals in Chile, currently underserved by the country's traditional financial system. Caja Los Heroes has nearly 1 million affiliates, and 77% of the Company's loans are granted to debtors with monthly income under US$613.

Market Impact Assessment: IFC anticipates that the project will enable the development of systemic changes to existing market that will deliver sustainable development impact by allowing foreign investors capital to fund Caja's social business. In particular:

Inclusiveness - Through a replication effect, IFC anticipates that the project will result in increased access to products and services for underserved groups through the support of Cajas' social credit and benefits program.
Market Resilience - Through the market enabling effect of - by the first time - obtaining local regulator permission for a foreign investor to invest and fund Cajas' social credit portfolios, IFC anticipates the project will result in lasting systemic improvements that will help the Cajas market withstand shocks by diversifying sources of funding and lowering the risk profile of the Cajas' sector.

The Project is expected to:

Foster further investments in the Cajas sector, as this would be the first international funding transaction for a Caja de Compensacion de Asignacion Familiar in Chile. This should improve the overall funding profile of the Company and the Cajas sector as whole;
Support a Chilean NBFI. Caja Los Heroes as a non-deposit taking FI, mainly rely on debt and financial markets for funding. IFC can play a countercyclical role under current context in Chile, which has recently showed a slowdown in economic activity.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of a loan of up to US$50 million to support Caja Los Heroes social lending activities in Chile and has been classified as Category FI-3 according to the IFC’s Sustainability Framework. The E&S risks of the project are associated to those of the client’s portfolio, which due to the focus on credit for low-income families are considered to be low. The client will be required to continue to demonstrate commitment to meet the labor standards under PS2 and to inform the IFC if there are any changes in the scope of its operations that affect the E&S risk of its portfolio.

Contacts

For Inquiries About the Project, Contact

Caja de Compensacion de Asignacion Familiar Los Heroes
Jorge Oliva
CFO
+562 29648187
jolivam@losheroes.cl
Av. Holanda 100
www.losheroes.cl

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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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