IDB Invest, a member of the IDB Group, has provided financing for US$200 million to Banco Sofisa S.A. (Sofisa) in Brazil, together with Proparco and FinDev Canada. The proceeds will contribute to increasing access to finance in Brazil by supporting the expansion of Sofisa’s SME portfolio.
The project will increase the availability of stable, long-term financing to Sofisa to support the growth of their SME lending, while contributing to improve the maturity and structure of its debt profile. SMEs are of great importance to Brazil’s economy, with over 300 thousand SMEs providing 39% of the country’s total jobs in 2020, but they face a severe financing gap, even more so if they are owned by women. A portion of the Proparco and Findev Canada financing will be dedicated to lending to Women-Owned SMEs.
This deal can potentially contribute to three United Nations Sustainable Development Goals (SDGs): Decent work and economic growth (SDG 8), Industry, innovation, and infrastructure (SDG 9) and Partnerships for the goals (SDG 17).
IDB Invest provided US$50 million and mobilized US$25 million from the China Fund for Latin America and the Caribbean, US$30 million from Proparco, and US$20 million from FinDev Canada, collectively the Co-lenders. In addition, US$75 million was mobilized through B loan participants. The financing is structured as a 4-year final maturity for the loans from the Co-lenders, and a 2-year final maturity from the B loan participants.
IDB Invest, through its Advisory Services, Proparco and FinDev Canada will provide support to Banco Sofisa S.A. in developing a sustainable finance strategy for fostering effective adoption of financial solutions for the SMEs (social and sustainable SMEs) segment and building internal capacities for increasing women-led/owned SMEs in the portfolio. To this end, IDB Invest, Proparco and FinDev Canada will provide Sofisa with technical support to improve its portfolio segmentation, determine improvements needed to better target the social and sustainable SMEs and SMEs led/owned by women, define social and sustainable SMEs eligibility criteria, and enhance its sustainable finance and gender lens investing strategies. The 3 co-lenders strongly contributed to the design of gender-oriented components and aim to join forces with Sofisa to strengthen the scope of this service.
The transaction will also qualify for the 2X Challenge, based on Sofisa’s commitment to support and finance WSMEs, as well as their own percentage of women in employment and in leadership.
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $12.1 billion in asset management and 333 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
Sofisa is a commercial bank with 60 years of experience in the Brazilian financial market and more than 30 years in the middle-market segment. Moreover, to complement its business model, in 2011 the Bank launched Sofisa Direto, the first digital bank in Brazil for individuals (currently, there are 23 digital banks) with a full online and mobile platform. As of today, Sofisa Direto is a key funding source of the Bank.
Sofisa’s expertise in financing SMEs is remarkable in Brazil due to the efficiency of its client acquisition and credit profile management, which delivers solid risk analysis that guaranties the quality of the loan portfolio.
About FinDev Canada
The Development Finance Institute Canada Inc., operating under the FinDev Canada brand, is a Canadian institution dedicated to providing financial services to the private sector in developing countries with the aim of combating poverty through economic growth by focusing on three main themes: economic development through job creation, women’s economic empowerment, and climate change mitigation. The Development Finance Institute Canada Inc. is a wholly owned subsidiary of Export Development Canada (EDC). Find out more about FinDev Canada here.
Proparco is the private sector financing arm of Agence Française de Développement Group (AFD Group). It has been promoting sustainable economic, social and environmental development for over 40 years. Proparco provides funding and support to both businesses and financial institutions in Africa, Asia, Latin America and the Middle-East. Its action focuses on the key development sectors: infrastructure, mainly for renewable energies, agribusiness, financial institutions, health and education.
Its operations aim to strengthen the contribution of private players to the achievement of the Sustainable Development Goals (SDGs) adopted by the international community in 2015. To this end, Proparco finances companies whose activity contributes to creating jobs and decent incomes, providing essential goods and services and combating climate change. For a World in Common.