Hipotecaria Vértice, a Sofol, or special-purpose financial company, began operations in 2004. Vértice an independent Sofol, ranked 13th in terms of assets out of 20 dedicated housing Sofoles. Vértice is headquartered in Mexico City, and has five regional offices covering 19 states in Mexico. To date, approximately 70% of Vértice’s business has involved construction financing. As of end-June 2007, Vértice had an outstanding loan portfolio of $178 million-equivalent, up from $25 million-equivalent as of December 2004. As part of its overall growth strategy, Vértice plans to further develop its mortgage business in order to achieve a more even split between its construction and mortgage finance activities within the next 3 to 5 years.

The company’s CEO, Samuel Suchoweicky Cohen, together with a group of selected investors and executives with expertise in key areas of the operations of the company, have developed a strategy to maintain the quality of its operations while expanding to new geographical markets in Mexico, and to increase Vértice’s size through the growth of its construction finance and individual mortgage businesses. Further, the company is interested in developing and promoting energy- and natural resource-efficient building practices within the markets where they operate.

The proposed IFC long term revolving credit facility will be for up to $40 million-equivalent accompanied by an IFC equity investment in Vértice of up to $6 million-equivalent--with the option for IFC to purchase up to an additional $2 million-equivalent amount of the company’s equity in the future. This section has been revised to reflect this option for IFC to purchase additional equity.

48.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity	8.0

* These investment figures are indicative

The company is located in Mexico City and it has branches in Guadalajara, Villa Hermosa, Puerto Vallarta, Tijuana, and Queretaro.

The development impact of IFC’s financing to Vértice is expected to be high in the following areas:

- Extending mortgage financing to previously underserved groups: The project will help address Mexico’s housing deficit, and enable the purchase of homes by lower-income population segments.

- Enabling incremental funding of housing finance activities through non-governmental means: Vértice will gain access to a much-needed alternative source of funds, as it seeks to replace financing currently obtained directly or indirectly from SHF.

- Improving energy-efficiency and natural resource-conservation efforts in Mexican households, by making available financing for homes with specific energy-efficiency and resource-conservation features.

IFC’s primary role in the project consists of:

- helping to meet a growing demand for housing in Mexico;
- providing financing alternatives/solutions to a drying source of governmental funding for the housing Sofoles, especially for second-tier institutions that focus on the lower-income segments of the population; and
- supporting the strategic goals of Vértice to diversify its asset composition (by increasing the percentage of mortgage loans in its total asset portfolio); provide new products such as financing for home improvements related to energy-efficiency and natural resource-conservation; and become a first-tier Sofol in the next few years.

This project has been provisionally classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze the FI portfolio, for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that may include a combination of:

- The IFC FI Exclusion List;
- The applicable National Social and Environmental Laws and regulations; and/or
- IFC Performance Standards

IFC will also review if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the project may be required to:

- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Performance Requirements.
- Submit a periodic report to IFC as per a format to be provided by IFC.