Daycoval was founded by the Dayan family which still owns 71% of the capital of the Bank and holds 100% of the voting shares, directly controlling the Bank. The remaining 29% of the Bank’s capital is publicly traded at Bovespa Stock exchange, since June 2007.

The proposed investment entails:

A subscription by the Investors and members of the Dayan family of warrants of common and preferred shares to be issued by the Bank, through the investment in Deposit Certificates (“CDB”) in an amount of up to BRL 410 million.

IFC will subscribe up to BRL 100 million equivalent.

54.99 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	54.99
Equity	0.0

* These investment figures are indicative

Daycoval is headquarted in São Paulo, Brazil. The sales teams are distributed through 27 branches in 16 states (plus the Federal District), providing coverage for a wide range of small and middle market businesses in Brazil.

The transaction assures that Daycoval will be able to continue taking advantage of lending opportunities involving the country’s SMEs, many of whom may have faced cutbacks of credit from other banks due to the global financial crisis. Furthermore, it demonstrates that significant amounts of funding can still be raised from private sector investors for a sound, emerging markets financial intermediary.

Long-term local currency funding, which will help the Bank diversify its funding base and expand its operations in an underserved segment of the market which is particularly affected by the global crisis.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC analyzed the FI portfolio for types of transactions, size, tenor and industry sectors and determined the Applicable Performance Requirements based on an analysis of the potential Social and Environmental risks associated with the FI portfolio. The Applicable Performance Requirements are:

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

IFC also appraised the FI’s labor practices and reviewed the FI’s existing Social & Environmental Management System (SEMS) and FI capacity to implement the same. It was found that the FI has a satisfactory SEMS and sufficient capacity to implement the same. The FI has satisfactorily informed the IFC regarding its labor and working conditions.

Based on the Applicable Performance Requirements and FI SEMS and capacity review, the project will be required to:

- Maintain its existing Social & Environmental Management System (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