49396 - DCM MTC Bond

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Summary of Investment Information

Project Number

49396

Company Name

Muangthai Capital Public Company Limited

Date SPI Disclosed

Sep 3, 2024

Country

Thailand

Region

East Asia and the Pacific

Projected Board Date

Jun 10, 2024

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Sep 12, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 10, 2024
Signed : Jun 12, 2024
Invested : Aug 22, 2024

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The Project entails an IFC’s investment of up to US$150 million to be committed in tranches, the first of which will be a privately placed social bond of up to US$50 million (the Social Bond) issued by Muangthai Capital Public Company Limited (MTC or the Company), a leading publicly listed non-bank financial institution (NBFI) in Thailand, to support MTC expand its lending program to women micro-entrepreneurs, which helps ease social issues such as inequality, employment, and particularly access to finance for the base of the pyramid population in Thailand (the Project). The proposed social bonds will follow the Social Bond Principles of the International Capital Market Association (ICMA). The Social Bond proceeds will be earmarked to women microentrepreneurs in Thailand.

Associated Advisory Engagement

The proposed investment will be complemented with IFC’s capacity building program with a focus in enhancing its risk management standards to be more international and supporting MTC to obtain an international certification in responsible lending and client protection. The program will support MTC’s sustainable growth strategy in providing needed access to finance to underserved segment in Thailand.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	150.0
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 Woman-Owned SMEs
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Syndications	Loans to Woman-Owned SMEs
Syndications	Loans to MSME (mix of Micro and SME)

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

Development Impact

Project Level Outcome: Increased access and quality of credit for the base of the pyramid population in Thailand, especially women-owned/led micro entrepreneurs: IFC anticipates that through the support to MTC, this Project will make long-term financing available to support MTC in providing increased access to affordable finance to underserved segment in the country. Market Level Outcome - Integration: IFC anticipates that the Project will improve resilience in the market by reinforcing in Thailand the international standards of responsible finance. By adopting international standards to improve consumer protection, the project is expected to trigger market wide adoption of business practices to improve consumer protection and responsible finance through replication and demonstration effects.

Financial additionality: Resource mobilization and an innovative financing instrument: The proposed social bond will be the first social bond issuance by an NBFI in Thailand. As social finance is a new asset class for MTC, IFC will support MTC to structure its first social bond following the ICMA Social Bond Principles. Furthermore, IFC’s participation will be crucial to attracting investors in the Company’s public social bonds in the future. Non-Financial Additionality Knowledge, Innovation, and Capacity Building: IFC uses its global experience and knowledge to support MTC to adopt internationally recognized responsible financing standards and the ICMA Social Bond Principles.

E&S Category Rationale / Risks and Mitigation

The project entails a 3-year senior debt financing of up to US$150 million to Muangthai Capital Public Company Limited (“MTC” or the “Company”). The use of proceeds will support the women microenterprises portfolio of MTC. The project presents limited to no environmental and social (E&S) risks and impacts and is categorized as Category FI-3 in accordance with IFC's Environmental and Social Sustainability Policy. The proceeds will not be used to support coal-related activities or higher risk business activities that may include involuntary resettlement (including physical and economic displacement), risk of adverse impacts on Indigenous People, significant risks to or impacts on the environment, community health and safety, biodiversity or cultural heritage, risk of significant retrenchment or significant occupational health and safety risks to employees. Applicable performance requirements will include IFC Exclusion List and national E&S laws and regulations. The company will be required to nominate E&S roles and formalize E&S procedures by including screening mechanisms against the IFC Exclusion List and applicable E&S national laws for its micro loans (with business-related purpose). The HR policies of MTC are aligned with Performance Standard 2 (PS2) requirements and the company follows the applicable Life and Fire Safety requirements. MTC will also be required to comply with PS2 requirements on labor and working conditions for its own operations.

Contacts

For Inquiries About the Project, Contact

Muangthai Capital Public Company Limited
Parithad Petampai
Deputy Managing Director
+66 2 483 8888
parithad.p@muangthaicap.com
332/1 Jaransanitwong Road | Bangplad | Bangplad | Bangkok | Thailand | 10700
https://investor.muangthaicap.com/en/company-info/mtc-overview

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