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Summary of Investment Information

Project Number

48624

Company Name

Tanner Servicios Financieros S.A.

Date SPI Disclosed

Apr 22, 2024

Country

Chile

Region

Latin America and the Caribbean

Projected Board Date

May 31, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 23, 2024

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jul 15, 2024
Signed : Sep 4, 2024
Invested : Oct 21, 2024

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed investment consists of: (i) an equity investment of up to US$20 million equivalent in Chilean pesos (CLP) in newly issued common shares of Tanner Servicios Financieros S.A. (“Tanner” or the “Company”) to support the Company’s growth during the setup of a full commercial bank, and (ii) a 5-year senior unsecured convertible loan for up to US$20 million (the “C Loan”) to finance the Company and new bank’s electro mobility sub-projects and micro, small and medium enterprises (MSMEs) portfolio, including women-owned small and medium enterprises (WSMEs) (the “Project”).

In January 2024, Tanner obtained a provisional authorization from the regulator to establish a banking subsidiary, the first of a 3-stage phased approval process. IFC will support the Company with capital to facilitate the transformation process.

Associated Advisory Engagement

The investment will be complemented with advisory services.

Sponsor / Cost / Location

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

Development Impact

Project Outcome Stakeholders – access to finance for SMEs including women-owned SMEs: While Chile has made progress in reducing the gender gap in terms of financial access, a significant gender disparity still exists especially in access to credit, as only 23% of the system’s commercial loans are destined to women-owned enterprises. The financing provided by IFC will help Tanner to execute the goals established through its new sustainability framework created a in 2023 which includes goals to increase its financing to sustainable areas such as women-owned businesses and clean transportation. Stakeholder effects – Access to climate finance, electric vehicle financing: Financial institutions like Tanner will play a critical role to support the transition to a cleaner way of transportation . Through the Project, IFC will support Tanner to help the Company develop a strategy to further strengthen its lending operations in electromobility. Market Creation Sustainability: One of the mayor contributors to greenhouse gas (GHG) emissions in Chile is the transportation sector. In order to achieve a de-carbonization of the transportation sector, Chile will require a fast uptake of electric vehicles (EVs). In this project, IFC will support Tanner in transforming into a commercial bank, bringing in a new player in the segment with a clear strategy focused on clean transportation. IFC anticipates that the Project will show other players the financial viability and growing opportunities in EV financing, supporting green transportation, and leading to the reduction of GHG emissions through the demonstration and replication channels.

Financial Additionality Financing Structure: IFC will provide Tanner with a longer-term funding than what is readily available in the market for a non-banking financial institution. The 5-year convertible loan will support Tanner’s portfolio growth while strengthening its asset/liability management. IFC’s own account equity: By acquiring common shares of Tanner, IFC will help strengthen the Company’s capital, allowing it to finance the growth planned for the next 3 years while it implements its transformation strategy at a time of macroeconomic uncertainty. At the same time, IFC’s investment will signal the market about the creditworthiness and corporate governance of the Company ahead of the creation of a full commercial bank. Non-Financial Additionality Knowledge, innovation, and capacity building: The investment will be complemented with advisory services destined to support Tanner with its transition to a banking entity and to further develop the Company’s strategy, either focused on the Company’s digitalization, gender or climate finance strategies.

E&S Category Rationale / Risks and Mitigation

The Project has been categorized as FI-2, in accordance with the IFC’s Sustainability Framework. The proposed investment consists of an up to US$20 million equity investment and a US$20 million 5-year convertible senior loan to Tanner Servicios Financieros S.A. ("Tanner" or the "Company"), a leading non-banking financial institution (NBFI) in Chile specialized in providing credits to Micro Small and Medium Sized Enterprises (MSMEs), car loans, factoring, commercial loans and other services. The E&S risks and impacts of the Project derive from the company’s capacity to assess and manage the E&S risks associated with its pipeline and portfolio, including MSMEs and corporate transactions. On the MSME side, the proposed pipeline includes climate finance and financial inclusion, as well as electric vehicle loans to individuals, while on the corporate side, Tanner has exposure to sectors such as agriculture, oil, gas and mining, finance and insurance, among others. For this Project Tanner will be required to apply the IFC Exclusion List, host country Environmental and Social laws and regulations and relevant aspects of the IFC Performance Standards (where applicable). Tanner will not support coal-related activities and be required to implement IFC's approach to greening equity investments in financial institutions.

Tanner has an ESMS in place and is currently working on further enhancements. The scope of the ESMS requires that transactions above US$500,000 be screened against the exclusion list and applicable E&S laws. For transactions above US$5 million, the policy requires additional assessments described in an E&S questionnaire covering relevant aspects of the IFC Performance Standards (PSs). The ESMS officer reports directly to the Compliance Manager. As part of the Project, the client will be required to enhance its factoring transaction screening to assess the associated E&S risks, including the applicability of the IFC exclusion list and review of the applicable law for both buyer and seller; and to strengthen the categorization process to ensure identification of potential high-risk activities and due diligence and monitoring against the IFC PSs. Tanner will also be required to seek consent to disclose climate related sub-projects of US$20 million equivalent or more, on a yearly basis, including names and locations.

Title	Anticipated Completion Date
Staff Training	08/15/2024
ESMS Enhancement	08/15/2024

Contacts

For Inquiries About the Project, Contact

Tanner Servicios Financieros S.A.
Derek Sassoon
Chief Executive Officer
+56233257538
derek.sassoon@tanner.cl
Huerfanos 863, Piso 10, Santiago, Chile
www.tanner.cl

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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.

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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.

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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.

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.

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