42393 - DCM HMC PDF

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Summary of Investment Information

Project Number

42393

Company Name

HMC ANDEAN PRIVATE DEBT FUND

Date SPI Disclosed

Oct 28, 2019

Country

Latin America and the Caribbean Region

Region

Latin America and the Caribbean

Projected Board Date

Nov 25, 2019

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 9, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Funds

Previous Events

Approved : Jan 21, 2020
Signed : Mar 29, 2021
Invested : Oct 7, 2021

Sector

Small Business Fund

Project Description

The proposed transaction involves an IFC investment in HMC Andean Private Debt (the “Fund”), a US$100 million credit opportunity fund, focused on investing in senior debt for mid-size companies (“MMEs”), mainly in Colombia and Peru with possible opportunistic investments in Chile for up to 20% of the Fund’s capital (the “Project”).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	20.0

Development Impact

The most significant, expected Project-level effects are increased access to long term finance to MMEs in Chile, Colombia and Peru. Beyond the project, IFC anticipates that the investment will result in an increase in market integration, as it helps a further development of the alternative debt funds market in Latin America, which is a key component of a well-functioning capital market, via the innovation and competition, market enabling and demonstration and replication channels.

IFC's additionality is financial and non-financial and consists of: (i) financial structure, as the Project supports HMC Capital with funding terms that are scarce in the local market to be used to provide longer term loans to MMEs than those available in Chile, Colombia and Peru, (ii) risk mitigation, as IFC's support to the Fund will send positive signals to the capital markets, especially for an asset class that is currently outside of large institutional investors' focus and (iii) standard setting, as IFC's participation in the Fund will enhance corporate governance and environmental and social principles.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of an investment in a credit opportunity fund domiciled in Chile. The fund aims to provide financing mainly to middle market enterprises (“MMEs”) in Colombia and Peru and Chile. Target companies on the pipeline are from a variety of sectors that includes: oil & gas, food, manufacturing, real estate and mining, however the project will exclude any activity with significant E&S impacts such as (a) involuntary resettlement, (b) risk of adverse impacts on Indigenous Peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks. It will also not support any activities related to coal such as coal mining, coal transportation, coal-fired power plants, or infrastructure services dedicated to support any of these activities. The portfolio supported through this project is expected to include business activities that have potential limited adverse environmental or social risks or impacts that are few in number, generally site specific, largely reversible, and readily addressed through mitigation measures. Based on the expected risks of the portfolio, the project has been categorized as FI-2. For this project, HMC Capital will be required to screen all investments against the IFC Exclusion List, host country laws and regulations, and IFC Performance Standards as needed.

The key E&S risks and impacts derive from HMC Capital capacity to identify and manage the potential environmental and social risks associated with its investing activities, in particular those in the oil & gas, food, manufacturing, real estate and mining sectors, which typically include: occupational health and safety, pollution prevention, waste and wastewater management, labor and working conditions, and community impacts, among others. The Fund already has an ESMS in place and as part of this project, it will be required to enhance its E&S management system to improve the assessment of investments in the mining, oil and gas and other sectors. As part of this project, the client will be required to: (i) enhance ESMS to assess the E&S risks of specific sectors, (ii) maintain qualified personnel to manage the ESMS, and (iii) submit a periodic E&S report to IFC.

Contacts

For Inquiries About the Project, Contact

HMC Capital
Mr. Daniel Dancourt
CIO
+511 480 0149
ddancourt@hmccap.com
Av. Manuel Olguín 335, Of. 1108 Edificio Link Tower, Santiago de Surco, Lima, Peru
www.hmccap.com

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Telephone: 202-473-3800
Fax: 202-974-4384

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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
Establish SEMS	03/31/2020
Formalize procedures	02/28/2020
Staff Training	02/28/2020
Enhance ESMS	02/28/2020

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