40920 - BPL Sr Loan

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Summary of Investment Information

Project Number

40920

Company Name

BUSINESS PARTNERS LIMITED

Date SPI Disclosed

May 8, 2018

Country

South Africa

Region

Africa

Projected Board Date

Jun 15, 2018

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG ME & Africa

Industry

Financial Markets

Previous Events

Approved : Jul 26, 2018
Signed : Sep 28, 2018
Invested : Oct 15, 2019

Sector

Finance Companies

Additional Project Attributes

Blended Finance

Project Description

The project consists of a 6-year ZAR600 million senior loan to Business Partners Limited (“BPL”). The IFC loan forms part of the SME Push Program and will strengthen BPL’s long-term funding position and support the expansion of its lending operations to underserved SMEs in South Africa.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	45.75
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	Loans to SME Borrowers

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

Development Impact

Project-level development impacts: 1) Stakeholder impact: IFC anticipates that the project will increase access to finance for underserved SMEs, particularly those operating in the agricultural value chain, manufacturing, retail, and trade sectors. 2) Economy-wide effects: By supporting BPL's SME clients in their expansion, the project is expected to help contribute to job creation and economic growth. Market-level development impact: 1) Competitiveness: BPL's unique product offering enables it to serve a segment of SMEs that cannot normally be reached by commercial banks. This project will enable BPL's specific product offering to become more widely available in the market, while also increasing the overall efficiency of serving this segment. 2) Inclusiveness: IFC anticipates that the Project will enable BPL to sustainably expand its financial services to under-served women-owned SMEs, thereby demonstrating their bankability and encouraging other financial institutions to also expand their services to this segment.

1) This project represents the first engagement with BPL targeting South Africa, an important step in strengthening the relationship by meaningfully collaborating on the shared goal of financial inclusion through the financing and support of women-owned SMEs. 2) BPL's nature as a non-bank lender to SMEs has traditionally implied challenges in obtaining competitive long-term funding from domestic sources. IFC's investment will be a stamp of approval for the company, strengthening its ability to attract funding from other lenders. 3) IFC can, through this project, enable BPL to improve its existing collateral structure with other lenders, which in turn can allow BPL to safely expand its borrowing capacity overall.

E&S Category Rationale / Risks and Mitigation

This project has been categorized as a Category FI-2 project according to IFC’s Environmental and Social Review Procedure. Business Partners Ltd (“BPL”) is a South African financial institution which provides lending to SMEs across a number of sectors including Financial Intermediaries, personal finance, manufacturing, construction, transport & communication and hospitality. The environmental and social risks and impacts associated with the activities of SMEs are considered limited and can be readily addressed through mitigation measures. As this facility is a loan to support SMEs, the proposed applicable performance requirements are the IFC Exclusion List and the applicable national social and environmental laws in South Africa.

The main E&S risks and impacts relate to the ability of the financial institution to identify and manage the E&S risks associated with its SME lending activities as required under Performance Standard 1, as well as the labor standards as required under Performance Standard 2. BPL is an existing IFC client has an E&S team as well as a framework for managing the E&S risks and impacts associated with its lending activities to SMEs. The client has designated an Environmental and Social Officer and team responsible for ensuring ESMS implementation in the institution. Although BPL has provided training to the team responsible for E&S training, additional sector specific E&S training is required to further enhance BPL’s capacity to implement the E&S risk management system. The ESMS framework and implementation has been found to be largely satisfactory, implementation of recommendations for further improvement will be continuously monitored and supported by IFC. In relation to IFC Performance Standard 2, as an existing client, BPL’s labor standards meet the requirements of this Performance Standard.

S.no	Title	Anticipated Completion Date	Status
1	Staff Training	08/28/2018	Completed
4	Other1 - Evidence of adequate ESMS implementation	06/29/2018	Completed

Contacts

For Inquiries About the Project, Contact

Business Partners Ltd.
Mark Paper
Chief Operating Officer
+27 0117136600
mpaper@businesspartners.co.za
37 West Street Houghton Estate, Johannesburg, South Africa
www.businesspartners.co.za

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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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Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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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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