Financiera Crear’s main shareholder is Compartamos, with an 82.7% stake. Compartamos, an existing IFC client, is the largest microfinance provider in Mexico and the largest, in terms of number of active clients, in the LAC region. It has been highly successful in the market with a proven model to address the specific microfinance needs and thereby able to compete with larger consumer lending players in the country. Compartamos has recently begun expanding its operations in Central and South America; the acquisition of Financiera Crear is the first step in their expansion to South America.

The proposed IFC investment to finance the Company’s MSE portfolio consists of:
a senior A loan for up to PEN$35 million; and
a syndicated loan for up to PEN$35 million.

13.01 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	13.01
Equity

* These investment figures are indicative

Crear’s portfolio is focused on small and micro companies (90% of the portfolio), with average loans of US$1,500. It is mainly concentrated in the cities of Arequipa (52%) and Lima (48%).

The development impact of the Project is expected to be high, as it will enhance the ability of Financiera Crear to support productive micro, small and medium enterprises which will in turn stimulate growth, employment generation and poverty reduction. In addition, Financiera Crear will be able to increase its outreach and sustainability incorporating thousands of new entrepreneurs to the formal financial sector.

IFC''s expected role in the Project includes: (i) supporting Financiera Crear''s funding plan for 2011-2013, helping diversify funding sources and lowering funding costs for strategically important non-bank microfinance institutions; and (ii) facilitate the south to south regional expansion of Banco Compartamos, a leading Mexican microfinance operator.

The Project will provide a positive signal to the market regarding the Company and the Peruvian microfinance sector, in the context of the recent government change, thus helping facilitate funding from other finance providers to the Company in particular and the segment in general.

This project has been classified as Category FI according to IFC''s E&S Review Procedures Manual. During appraisal IFC reviewed the client''s portfolio of activities to assess the key E&S risks, which for this client can be considered low due to its focus on microfinance. IFC also reviewed Crear''s E&S risk management structure and labor standards. The client does not have an existing Environmental and Social Management System (ESMS) and will be required to adopt the IFC Exclusion List prior to disbursement. Financiera Crear also does not have a fully developed grievance mechanism, although it is already adopting the one based on that of Compartamos, which would satisfy IFC''s labor policy upon implementation. Considering the nature of activities supported, the project will be required to: (i) implement an ESMS prior to disbursement and to the satisfaction of IFC; (ii) demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and (iii) submit a periodic report as per a format to be provided by IFC. The E&S requirements are comparable to those established for Compartamos, which agreed to update its exclusion list as part of the last IFC investment.