46124 - Sudameris Loan

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Summary of Investment Information

Project Number

46124

Company Name

SUDAMERIS BANK S.A.E.C.A.

Date SPI Disclosed

Apr 19, 2022

Country

Paraguay

Region

Latin America and the Caribbean

Projected Board Date

May 20, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 10, 2022

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : May 20, 2022
Signed : Jun 1, 2022
Invested : Jul 8, 2022

Sector

Commercial Banking - General

Project Description

The proposed investment consists of a 5-year A-loan to Sudameris Bank S.A.E.C.A (Sudameris or the Bank) for up to US$75 million, to expand the Bank’s small and medium enterprises (SMEs) lending program, of which at least 30% is expected to be on-lent to Women-Owned SMEs (WSMEs) (the Project).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
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	Loans to SME Borrowers
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

IFC anticipates that the Project will contribute to narrow the finance gap for SMEs in Paraguay, supporting financial inclusion in the country. The SME finance gap in Paraguay is US$3.9 billion according to the SME Finance Forum, representing approximately 14% of the country's GDP. Informal micro and SME demand for finance is estimated at another US$3.6 billion. Improving access to finance and thus productivity of SMEs is crucial for the development of Paraguay's economy, as SMEs are a key driver of economic growth and job creation. Furthermore, 30% of the proceeds are expected to be used to originate loans to WSME, a key underserved sub-segment in the economy. The Project will also increase the competitiveness of the SME financing sector by enabling the Bank to expand its operations. Through the Project, the Bank will demonstrate to other players the commercial viability and business opportunity presented by underserved SMEs proven by its growing market share.

E&S Category Rationale / Risks and Mitigation

The proposed investment consists of a 5-year A-loan to Sudameris for up to US$75 million, to expand the Bank's SMEs lending program, particularly for WSMEs. E&S risks associated with the proposed project are expected to be of a low to moderate nature. The Project will not support investments involving activities or practices described in IFC's exclusion list, coal-related operations, category A projects, or sub-clients operating or located in the El Chaco region. The Project has been categorized as FI-2, in accordance with the IFC's Sustainability Framework. The E&S risks and impacts of the Project derive from Sudameris' capacity to assess and manage E&S risks associated to the Bank's SME and WSME pipeline and portfolio in sectors such as services, retail, and construction and are expected to be mostly labor conditions related, including OHS aspects, and low to medium in E&S risk nature.

Sudameris is a former IFC client and as such, has developed and implemented an ESMS, in operation since 2012. The Bank's E&S policy commitments include E&S risk assessment and monitoring procedures. Sudameris' ESMS was upgraded in 2019 to adjust E&S screening procedures to include additional requirements following IFC Performance Standards for project and corporate finance loans higher than US$5 million. The ESMS includes a documented procedure to assess E&S potential impacts, screening against the Exclusion List, host country laws and regulations, including E&S tools based on geographic information systems. As part of this transaction, Sudameris will be required to implement additional procedures to screen out sub-clients operating or located in the El Chaco region, as well as enhancing its internal grievance mechanism mostly to prevent any form of harassment at workplace. The client will submit an annual E&S report.

Contacts

For Inquiries About the Project, Contact

Sudameris Bank S.A.E.C.A
Francisco Olivera
Treasury Head
+595 21 416 6000
francisco.olivera@sudameris.com.py
Independencia Nacional 513, Asuncion, Paraguay
http://www.sudameris.com.py

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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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Task Title & Description	Anticipated Completion Date
Upgrade Applicable Requirements
Internal grievance mechanism	09/26/2022

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