26235 - CISA NPLs

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Summary of Proposed Investment

Project Number

26235

Company Name

Compania de Gerenciamiento de Activos Ltda.

Date SPI Disclosed

Jun 20, 2007

Country

Colombia

Industry

Financial Markets

Projected Board Date

Jul 26, 2007

Status

Completed

Sector

Other Non-Depository Credit

Department

Regional Industry FIG LAC & EUR

Environmental Category

Previous Events

Approved : Jul 26, 2007
Signed : Jul 27, 2007
Invested : Aug 24, 2007

Project Description

IFC has been requested to participate in a ‘Consortium’ including affiliates of the Capital Recovery Group of AIG Global Investment Corp., Covinoc S.A. and CarVal Investors, LLC to finance the purchase of a portfolio of Non-Performing Loans (NPLs) and other Non-Performing Assets (NPAs) a majority of which were accumulated by the government of Colombia post the financial crisis of 1999. IFC would provide both debt and equity financing to a local Colombian SRL established by the Consortium.

The proposed project presents IFC a unique opportunity to participate in the first NPA deal of this scale being placed to international bidders in Colombia. It also marks a turning point for the authorities as after this sale the government would have no further obligations pertaining to its intervention post financial crisis.

IFC would use this investment to create a platform for itself and offer this product to its portfolio clients. The reciprocity in this arrangement would be in the Sponsors bringing with them the manuals and expertise, Covinoc providing the man power and execution capabilities and IFC providing the country coverage and possible introduction to a new client set. Furthermore IFC could assist SRL in packaging and securitizing part of the mortgage and consumer portfolio through its portfolio company CHMC.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	108.60
Equity	4.40

Development Impact

The proposed project will have the following development impacts:

- Value-added to the distressed assets: The transaction will not only purchase and settle NPAs, but more importantly will build internal collection and restructuring capacity to create value-added to the distressed assets.

- Providing liquidity: The transaction will help the Colombian government dispose of the non-performing assets through the private sector.

- First step to develop a secondary market for NPAs in Colombia. The transaction will provide additional liquidity to local financial institutions.

- Promoting local investment in NPAs in Colombia: Through the syndication IFC will bring local resources to the transaction, promoting additional NPA investments.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. This project involves IFC support for investment in an acquired portfolio of non-performing assets, and considering the nature of activities supported, the project will be required to:

- Ensure that its acquired portfolio does not have subprojects on the IFC FI Exclusion List or subprojects that have substantial unresolved social or environmental issues;

- Commit to work with the assets it is restructuring to ensure that the subprojects are operating in compliance with Applicable National Environmental and Social Laws and regulations and IFC FI exclusion list, or have an action plan to achieve the same within a reasonable time frame;

- Submit a periodic report to IFC as per a format to be provided by IFC

Contacts

For Inquiries About the Project, Contact

Jose Luis Lascurain, Vice President
AIG Global Investment Corp.
599 Lexington Avenue
25th Floor
New York, NY 10022

55343-9439
+1-646-735-0500

Jack Bohn, Managing Director
CarVal Investors, LLC
12700 Whitewater Drive
Minnetonka, Minnesota

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Telephone: 202-473-3800
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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

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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