Summary of Proposed Investment
Project Number
11078
Company Name
ITAU UNIBANCO SA
Date SPI Disclosed
Oct 4, 2001
Country
Brazil
Industry
Financial Markets
Projected Board Date
Nov 29, 2001
Status
Completed
Sector
Commercial Banking - General
Department
Global Industry, Financial Markets
Environmental Category
FI
Previous Events
Approved : Dec 13, 2001
Signed : Feb 6, 2002
Invested : Jan 21, 2003
Project Description
Unibanco provides banking, insurance, leasing, brokerage and asset management products through relatively independent subsidiaries. Under the proposed credit line, on-lending will be made for projects in the areas of sanitation, development of water and sewage services, small power plants including biomass-based energy plants, industrial expansion, and environment support.
The credit line would be used to finance companies that have viable projects, but have limited access to term financing. The project is a response to:
a) Strong demand for and inadequate availability of long-term financing for private infrastructure projects.
b) Inadequate financial resources for the private sector and exports.
Even for the more efficient firms, capital scarcity has been a major constraint to modernize plant and equipment, expand to meet external competition, or take advantage of new opportunities opened by changes in relative prices. Under today’s market conditions, with access alternately closed (when bad news occurs) or open only for top-quality credits, the ability of Brazil’s private sector to borrow externally remains minimal, and limited to a few blue chip companies and banks for short maturities at high rates. IFC''s credit line will help provide much-needed long-term financing to Brazilian companies. Furthermore, it will enable IFC to help a relatively large number of Brazilian corporates more efficiently than through direct IFC lending.
This project has important benefits for Brazil’s financial and infrastructure sectors--both key in promoting growth. Increased productivity in a globalizing environment is today''s challenge for Brazilian firms, which, historically, have mainly competed against other domestic producers. In this connection, improving the country’s infrastructure is a priority of the government of Brazil, since major bottlenecks are emerging in power, ports, railways, gas, roads, urban transport, and water, due to low investment over many years.
Given the weak investor confidence in emerging markets, there is a major capital and financing constraint, and several initiatives have been delayed or put on hold. The proposed credit line will be critical to the country’s rehabilitation and expansion efforts, as it continues to recover from the recent difficult environment and as the Brazilian companies brace for competition in globalized markets.
The credit line would be used to finance companies that have viable projects, but have limited access to term financing. The project is a response to:
a) Strong demand for and inadequate availability of long-term financing for private infrastructure projects.
b) Inadequate financial resources for the private sector and exports.
Even for the more efficient firms, capital scarcity has been a major constraint to modernize plant and equipment, expand to meet external competition, or take advantage of new opportunities opened by changes in relative prices. Under today’s market conditions, with access alternately closed (when bad news occurs) or open only for top-quality credits, the ability of Brazil’s private sector to borrow externally remains minimal, and limited to a few blue chip companies and banks for short maturities at high rates. IFC''s credit line will help provide much-needed long-term financing to Brazilian companies. Furthermore, it will enable IFC to help a relatively large number of Brazilian corporates more efficiently than through direct IFC lending.
This project has important benefits for Brazil’s financial and infrastructure sectors--both key in promoting growth. Increased productivity in a globalizing environment is today''s challenge for Brazilian firms, which, historically, have mainly competed against other domestic producers. In this connection, improving the country’s infrastructure is a priority of the government of Brazil, since major bottlenecks are emerging in power, ports, railways, gas, roads, urban transport, and water, due to low investment over many years.
Given the weak investor confidence in emerging markets, there is a major capital and financing constraint, and several initiatives have been delayed or put on hold. The proposed credit line will be critical to the country’s rehabilitation and expansion efforts, as it continues to recover from the recent difficult environment and as the Brazilian companies brace for competition in globalized markets.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mr. Sergio Zappa
Managing Director
Av Eusebio Matoso 891
Sao Paulo, SP, Brazil
Phone: (5511) 3097 4845
Fax: (5511) 3097 2675
Managing Director
Av Eusebio Matoso 891
Sao Paulo, SP, Brazil
Phone: (5511) 3097 4845
Fax: (5511) 3097 2675