46784 - DARP NPL Jive II

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Summary of Investment Information

Project Number

46784

Company Name

IFC FUNDO DE INVESTIMENTO EM COTAS DE FUNDO DE INVESTIMENTO MULTIMERCADO CREDITO PRIVADO II

Date SPI Disclosed

Oct 20, 2022

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Nov 30, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jul 1, 2023

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Dec 19, 2022
Signed : Mar 3, 2023
Invested : Jun 27, 2023

Sector

Distressed Assets SPV

Project Description

The proposed project entails investing in the Brazilian distressed assets market in partnership with Jive Investments Gestão de Recursos e Consultoria S.A. (Jive or the Company). It will consist of an investment in a special purpose vehicle, to be established by Jive and IFC, to acquire distressed assets (DARP SPV Jive II) (the Project).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	120.0

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 Equity	DARP - MSMEs NPL
Straight Equity	DARP - Corporate NPLs - Pool of assets
Straight Equity	DARP - Corporate NPLs - Single assets

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

Development Impact

• Stakeholders impact: The Project will support the acquisition and resolution of small and medium enterprises (SME) and corporate distressed assets in Brazil. By creating a more active distressed market, it will help: (a) financial institutions to offload distressed assets, and consequently release capital and decrease their liquidity needs, which will strengthen their capacity to increase their lending activity; and (b) Brazilian companies to normalize their defaulted obligations, regain access to credit and continue their operations. The Project will also support companies by providing immediate liquidity through the acquisition of their existing legal claims and precatórios. • Market impact: IFC expects the Project will contribute to further develop the Brazilian distressed assets market by supporting Jive, an integrated asset manager and servicer which services a wide range of distressed assets. These are assets are currently not resolved in the market in an efficient manner.

IFC’s additionality is derived from two aspects: (i) resource mobilization: IFC will play an anchor role in the fundraising process and help to mobilize up to US$360 million of capital from other investors, particularly at a time when a rise in DA is expected vis-à-vis the current macroeconomic environment with high inflation and interest rates in Brazil; and (ii) standard setting: IFC will continue to support Jive in improving its environmental and social (E&S) practices by establishing and implementing an enhanced Environmental and Social Management System (ESMS).

E&S Category Rationale / Risks and Mitigation

The Project consists of a DARP platform to be managed by Jive and will focus on distressed assets in Brazil including: i) mortgage, SME, and corporate loans, through pools or single name assets; ii) distressed real estate; iii) legal claims and financing of legal claims; and iv) special situations opportunities. Corporate loans with higher risk business activities that may include: i) involuntary resettlement; ii) 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; will not be eligible. Therefore, the Project has been classified as category FI-2 according to the IFC Sustainability Framework. The main potential E&S risks are associated to the acquisition of corporate distressed assets in sectors of higher E&S risk nature and limited leverage to enforce the application of E&S requirements. To limit the E&S risks, the Project will also not support: i) coal-related activity; ii) blind pool of corporate NPL; and iii) medium E&S risk projects, where identified risks are associated with Community Health, Safety and Security risks (PS4), and Jive will have limited leverage to implement corrective action plans. As part of the Project, Jive will be required to screen sub-projects against the IFC exclusion list, E&S laws and regulations and the Performance Standards, as applicable. Financial Intermediary Sub-Project Disclosure IFC will periodically disclose the names, locations and sectors for qualifying sub-projects that have been supported by this IFC investment through financial intermediaries, subject to regulatory constraints and market sensitivities. Any qualifying sub-project(s) will be disclosed during the annual reporting cycle established with the client.

Jive is an existing client (#DARP NPL Jive 42527) with an ESMS in place and a satisfactory E&S performance. As part of the first project, Jive approved an ESG Policy, including procedures to screen out high risk/Category A type of projects targeting corporate single names and real estate assets. Properties used as collateral also follow the proposed risk screening. As for this Project, since targeted sub-projects may include corporate NPLs and special situation financing, Jive will be required to enhance its ESMS to include the Performance Standards, as applicable, to corporate segment. Jive will also be required to: i) hire a qualified external consultant to assess the E&S risks of applicable transactions; ii) submit the first three ESDDs; iii) provide training; and iv) to submit a periodic report to IFC. Finally, as per IFC's Paris Alignment Assessment, Jive will be required to enhance its sub-projects climate physical risk screening, as applicable.

Contacts

For Inquiries About the Project, Contact

Jive Investments Gestão de Recursos e Consultoria S.A.
Investors Relation

+55 (11) 3500-5055
ir@jiveinvestments.com
18th floor - São Paulo/SP – Brazil01452-002
https://www.jiveinvestments.com/

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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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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.

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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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Task Title & Description	Anticipated Completion Date
Upgrade Applicable Requirements	02/27/2023
Staff Training	05/29/2023

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