41306 - Progresemos V

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Summary of Investment Information

Project Number

41306

Company Name

FINANCIAMIENTO PROGRESEMOS SA DE CV SOFOM ENR

Date SPI Disclosed

Aug 17, 2018

Country

Mexico

Region

Latin America and the Caribbean

Projected Board Date

Sep 24, 2018

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Dec 23, 2018

Department

Regional Industry - FIG LAC

Industry

Financial Markets

Previous Events

Approved : Nov 9, 2018
Signed : Nov 29, 2018
Invested : Dec 21, 2018

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The project is to extend a Mexican Peso (MXN) line of credit to continue supporting the loan portfolio growth in Financiamiento Progresemos, S.A. de C.V., SOFOM, ENR (“Progresemos” or the “Company). The proposed project fits well into IFC’s financial sector strategy for Mexico, and offers IFC the opportunity to continue supporting a high growth and financially sound long-term partner that is successfully engaged in microfinance lending. It is expected to reach women microentrepreneurs in Mexican frontier regions and continue to: (i) enhance microlending competitiveness of the private sector; (ii) help deepen the financial sector since a high portion of the clients served, are outside the formal financial sector; and (iii) encourage sustainable social and environmental development.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.44
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 Microfinance Borrowers

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

Development Impact

The most significant expected project-level outcome is an increase in access to finance for micro and SE clients in 1,592 municipalities in 32 Mexican states with 92% of its clients in rural areas by 2020. IFC expects the Project to help Progresemos expand its unique co-financing model and reach an increased number of currently underfunded, Micro and SEs including women entrepreneurs; it expects to reach 450,000 microenterprises, and 1,500 small enterprises while the tripling the outstanding loan portfolio from USD80 million in 2017 to USD245 million in 2022 for micro enterprises and from USD 13.3 million in 2017 to USD 95 million in 2022 for small enterprises. Beyond the Project, IFC anticipates that the Project investment will have the potential to promote greater market inclusiveness via innovation, capacity building, and demonstration and replication channels.

IFC's additionality is both financial and non-financial: (i) financing structure, which entails the provision of local currency funding; (ii) resource mobilization, where IFC will mobilize three impact investors to invest in the Company; and (iii) knowledge sharing and capacity building through an advisory engagement leveraging IFC's global knowledge in the digital transformation of microfinance institutions, contributing to increasing access to finance for underserved micro and small enterprises in rural areas in Mexico.

E&S Category Rationale / Risks and Mitigation

The proposed project entails a 5-year senior unsecured loan for up to MXN250 million (~$12.5 million) for Financiamiento Progresemos, an existing IFC client, to support the Company’s lending operations. Progresemos is a non-bank multi-purpose financial institution (“SOFOM”) specializing in microfinance, SME and payroll lending. This project will support the company’s lending operations which have low E&S risks. Therefore, the proposed project has been classified as category FI-3 project according to the IFC Environmental and Social Review Procedure. Progresemos has a satisfactory Environmental and Social Management System (ESMS) to manage the E&S risks associated with its investment activities under existing IFC projects. However, considering its expansion into SME lending, Progresemos will be required to enhance its ESMS to manage any additional E&S risks. The client will also be required to provide Annual Environmental Performance Report to IFC.

Contacts

For Inquiries About the Project, Contact

Financiamiento Progresemos, S.A. de C.V., SOFOM, ENR
Roberto Flores
COO
+ 52 55 5575 2009 ext. 102
rflores@progresemos.net
Carretera Picacho Ajusco 130, Despacho 200, Colonia Jardines de la Montaña, 14210, Ciudad de Mexico, Mexico.
www.progresemos.net

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