46267 - BOP PRASAC 2022

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Summary of Investment Information

Project Number

46267

Company Name

PRASAC MICROFINANCE INSTITUTION PLC

Date SPI Disclosed

Mar 29, 2022

Country

Cambodia

Region

East Asia and the Pacific

Projected Board Date

May 16, 2022

Environmental Category

FI-2 - Limited

Status

Pending Approval

Last Updated Date

Mar 30, 2022

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed investment to PRASAC Microfinance Institution Plc (PRASAC or the Company) is a 3-year senior loan facility of up to US$80 million consisting of (i) IFC’s own account of up to US$50 million of which up to US$30 million in US dollar and up to US$20 million in local currency (LCY), and (ii) mobilization of up to US$30 million in US dollar. The loan proceeds will be used to support PRASAC’s financing to micro, small, and medium enterprises (MSMEs), and at least US$20 million of the loan proceeds will be dedicated to green financing, which will be IFC’s first green loan in Cambodia (the Project). This senior loan will be supported by the IDA Private Sector Window (PSW) Blended Finance Facility.

Sponsor / Cost / Location

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
Straight Senior Loan	Climate (not covered in any category)

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

Development Impact

The development impacts of the Project will be delivered through (i) improved access to finance for MSMEs; (ii) strengthened resilience among MSMEs in Cambodia by assisting financial institutions to improve responsible finance practice; (iii) increased access to climate finance, to support PRASAC to grow green financing, thereby catalyzing the private sector in Cambodia to adopt environmental and social sustainable principles, setting standards and reducing greenhouse gas emission.

IFC provides financial additionality via (i) financing structure, which entails mid-term financing, especially local currency mid-term financing which is scarce in the market, and (ii) innovative instrument - the portion of the financing dedicated to green lending to MSMEs will set the standard for potential future replicability. Non-financial additionality will be provided through knowledge, innovation and capacity building in green finance and responsible finance.

E&S Category Rationale / Risks and Mitigation

The Project is a senior loan facility to support PRASAC's MSME and green lending activities. PRASAC is a microfinance institution and serves retail, micro and SME customers. The sectors of its lending exposure include construction and real estate, agriculture, food & beverages, transportation, services and manufacturing. The green lending program to be developed will focus mainly on agriculture equipment financing and small-scale energy efficiency improvements and will follow the ICMA Green Loan Principles. The Project is expected to have overall medium E&S risks and has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The Project will not support any coal-related activities, or any higher E&S risk activities that involve (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. Applicable E&S performance requirements for this Project will be the IFC Exclusion List and relevant national E&S laws and regulations. The Project's key E&S risks derive from PRASAC's lending to MSMEs as well as its capacity and quality of environmental and social risk management system (ESMS) in place to manage such risks. Typical E&S risks associated with its MSME lending activities include occupational health and safety, life and fire safety, labor & working conditions, pollution control and waste management.

PRASAC was a client of IFC and has adopted E&S procedure for screening its lending activities against the IFC Exclusion List and has appointed E&S roles and responsibilities including an ESMS officer. For this Project, PRASAC will be required to upgrade the existing E&S procedure into an ESMS by incorporating, among others, procedures for verifying and monitoring compliance with applicable national E&S laws and regulations. The labor practices of PRASAC are found overall consistent with the requirements of IFC's Performance Standard 2 on Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

PRASAC Microfinance Institution Plc.
Mr. WON Soo Yeon
EVP & Chief Financial Officer
+855 23 220 102 / +855 96 718 5049
sooyeon.won@prasac.com.kh
Building 212, Street 271, Sangkat Tuol Tumpung 2, Khan Chamkarmon, Phnom Penh, Cambodia
https://www.prasac.com.kh

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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.

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
Retain ESMS Officer	07/29/2022
E&S training	07/29/2022
Upgrade E&S procedure into an ESMS	07/29/2022

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