48480 - EFSE gender

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Summary of Investment Information

Project Number

48480

Company Name

The European Fund For Southeast Europe S.A., SA

Date SPI Disclosed

Nov 2, 2023

Country

Southern Europe Subregion

Region

Europe

Projected Board Date

Dec 4, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Jan 4, 2024

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Dec 20, 2023
Signed : Dec 21, 2023
Invested : Dec 29, 2023

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed Project is an investment of up to EUR50 million or its USD equivalent in A-shares of The European Fund for Southeast Europe S.A., SICAV-SIF (“EFSE” or the “Fund”). IFC’s proceeds will support financing of the Fund’s micro, small and medium enterprises (MSMEs) with at least 40 percent of the proceeds to finance women-owned MSMEs.

EFSE is a structured debt fund channeling long-term capital for on-lending to MSMEs through bank and non-bank financial institutions (FIs). In addition, EFSE’s Development Facility provides technical assistance to FIs and entrepreneurs to complement the Fund’s impact. The Fund’s assets under management (AUM) stand at EUR1.2 billion as of June 30, 2023, diversified among 71 FIs in Southeast and Eastern Europe and Türkiye.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	54.58
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
Fund	Loans to SME Borrowers
Fund	Loans to Woman-Owned SMEs

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

Development Impact

Stakeholder effects (Increased access to MSME finance, including women-owned MSMEs): The most significant, expected stakeholder effect is increased access to finance for MSMEs, particularly for women-owned MSMEs, through long-term lending to banks, non-bank financial and microfinance institutions in Southeast and Eastern Europe. Since inception, EFSE generated more than 1,175,000 sub-loans totaling EUR9.8 billion. This directly contributed to reducing the MSME financing gap in the region – a target group which remains underserved by banks and other capital sources. Beyond the project-level outcome, IFC anticipates that the Project will promote greater market competitiveness among financial institutions that provide MSME loans for businesses in target countries, through capacity building and innovation channels. In addition, the investment will also (i) promote integration among public and private investors and (ii) inclusiveness through increasing focus on gender and diversity in the markets.

Long-term financing: The proposed IFC investment in the Fund will contribute additional sizable long-term capital of up to 8.5 years to enable funding for MSMEs, including women-owned MSMEs, in challenging times in the operating environments of the Fund’s markets. Risk mitigation: IFC’s continued commitment to EFSE will provide comfort and send a positive signal to the current and prospective private sector investors and support the future growth of the Fund.

E&S Category Rationale / Risks and Mitigation

The Project has been categorized as FI-2 according to IFC's Sustainability Policy. Pipeline to be supported through this project by EFSE, an existing IFC client, is expected to have potential limited adverse environmental and/or social risks or impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures. The Fund will not invest in any activities on IFC Exclusion List, coal-related activities, or higher risk business activities that may include 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. IFC's applicable E&S requirements for this Project will be the IFC Exclusion List, the host country laws and regulations, and the IFC Performance Standards, where necessary. In addition, EFSE's advisor will be required to continue applying their human resources practices in conformity with IFC's PS2 on Labor and Working conditions. The main E&S risks and impacts of this investment relate to EFSE having adequate systems and capacity in place to manage its lending operations in accordance with applicable requirements, including alignment with the IFC's Exclusion List, Host Country Laws and regulation, and the IFC Performance Standards as needed

Finance in Motion has already established an E&S management system, in line with the IFC E&S requirements, to identify, assess, and manage potential E&S risks and impacts related to EFSE's lending activities; has a designated E&S Manager responsible for the implementation of the ESMS; and has developed an external communication mechanism to address the public queries and concerns related to the Fund's investments. The policies and procedures are applicable to all investments made by EFSE. The ESMS includes the Fund's E&S policy, roles and responsibilities, and E&S screening, review and monitoring procedures and managing E&S risks of its investment activities. The E&S covenants, clauses, and corrective actions to mitigate E&S risks are incorporated into the investment agreements subscribed with each Partner Lending Institutions (PLI). For this specific Project, Finance in Motion will be required to continue retaining proper capacity and implementing the E&S risk management system in line with the IFC's applicable E&S requirements. Additionally, IFC will disclose investments on a yearly basis, including their names, sectors, and locations, if needed.

Contacts

For Inquiries About the Project, Contact

Finance in Motion GmbH
Joshua Olson
Manager
+49 69 271 035-804
j.olson@finance-in-motion.com
Carl-von-Noorden-Platz 5, 60596 Frankfurt am Main, Germany
www.finance-in-motion.com

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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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