Factorline was established in 1993 and has been become one of the largest independent factoring companies in Chile with a total portfolio of $333.6 million equivalent and over 5,000 clients. Factorline ranks # 3 in the market in terms of outstanding portfolio and a 15.2% market share in terms of volume and is the largest player of international factoring.

Factorline was established by the main shareholders of Banco BHIF: Grupo Massu and Grupo Said. As of today, the two main shareholders are Grupo Massu with about 57% of total shares and IFC with approximately 18% equity stake. The other shareholders are Mr. Jorge Sabag, the President of the company since 2002; Francisco Schulz, the former CEO of Factorline since its foundation; Ernesto Bertelsen R., the former Chairman of the Board also since its creation, and four members of the Senior Management of the company.

The proposed investment consists of a $15 million A loan for IFC’s own account.

15.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity

* These investment figures are indicative

Factorline is headquartered in Santiago, Chile, and serves its clients through 24 branches distributed throughout the country.

The development impact of IFC’s loan to Factorline is expected to be significant in terms of its support for productive small businesses:

- Enhance access to long-term finance for SMEs.

The project will allow Factorline to provide its SME client base access to funding with longer maturities enabling these to undertake capital investments at longer tenors and attractive costs. This will contribute to increase their income and profitability as well as employment generation.

- Support the growth of regions outside Santiago.

Factorline has a strong presence across the country and it is very active in regions outside Santiago, where there is a lack of large investments and where SMEs are key component to develop the regional economies and contribute to growth and job creation.

- Promote leasing.

Leasing has become a very attractive alternative for SMEs when the term finance from other sources is scarce, due to some advantages over conventional borrowing.

IFC is expected to play an important role in the project, as it will:

- Support smaller SMEs which lack of sustainable funding sources partnering with a local company focused on serving such niche.
- Promote lending in less developed regions of the country in order to support their growth and development.
- In a very important countercyclical role, through this project IFC will be able to fill a financing void due to the tightening of credit markets in emerging countries, including Chile.

This project involves IFC support for the leasing business and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Considering the nature of activities supported, the project will be required to:

- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, and that ensures that all its investments are screened and processed to avoid supporting activities on the FI exclusion list, and ensures that the use of the leased equipment complies with the applicable National laws;
- Identify qualified persons to manage and implement the procedure;
- Demonstrate commitment and resources to implementing the procedure;
- When leasing to business activities with potentially significant environmental and social risks (e.g., mining, oil production), inquire and review S&E information available in the public domain and avoid leasing to businesses that have substantial unresolved environmental and social issues. In such cases, the company will also need to satisfy itself that the activity is being undertaken in compliance with the applicable national laws;
- Submit a periodic report to IFC as per a format to be provided by IFC.