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Innovative Transaction for Banco Daycoval Allows IFC to Help Expand Credit for SMEs


In Washington:
Adriana Gomez
Phone: +1 202 458-5204
Email: agomez@ifc.org

Riham Mustafa
Phone: +1 202 758-4290
E-mail: rmustafa@ifc.org

In Brazil:
Claudia Reis
Banco Daycoval
Phone: + 55 11 3813-1344
Email: claudiareis@pressaporter.com.br

Juliano Capato
Banco Daycoval
Phone: + 55 11 3813-1344
Email: juliano@pressaporter.com.br


Washington, D.C., February 19, 2009—IFC, a member of the World Bank Group, has joined forces with two international private equity firms and the Dayan family to provide financing of 410 million reais (about $180 million) to Brazil’s Banco Daycoval S.A. to help it increase lending to small and medium enterprises amid the global financial crisis.

This is the first long-term financing for any Brazilian bank since global market conditions worsened last year.  

The five-year, local currency, convertible debt transaction, includes the participation of Cartesian Capital Group, Wolfensohn Capital Partners, L.P., and members of the Dayan family. IFC is providing 100 million reais under the transaction, which will help diversify Daycoval’s funding base and allow it to increase lending to existing and new clients. Many of those businesses have faced credit cutbacks from other banks because of the crisis.

“The transaction demonstrates that significant amounts of funding can still be raised from private sector investors for sound, emerging-market banks,” said Morris Dayan, Director of Investor Relations at Daycoval. “We are delighted to have worked with a respected group of international investors to increase our capacity to provide needed credit to borrowers in Brazil.”

Banco Daycoval is a leading midsize Brazilian bank that specializes in the middle-market segment, and also has significant retail lending operations.  Headquartered in São Paulo, it has 27 branches in 22 cities and 16 states across Brazil, including many regions underserved by other banks in the country. At the end of 2008, it had a credit portfolio of 3.7 billion reais and total assets of 6.8 billion reais.

Atul Mehta, Director of IFC’s Latin America and Caribbean region, said: "IFC is pleased to be able to support Banco Daycoval with this investment. The structure of this transaction allows Daycoval to lock in a considerable amount of medium-term funding from investors who are eager to become its shareholders. It also affords the bank greater flexibility to support the business operations of smaller companies, which play an important role in generating jobs and growth in Brazil.”

IFC has responded to the global financial crisis with a series of innovative transactions and initiatives, including bank recapitalization, and increased provision of trade finance, infrastructure funding, microfinance, SME lending, and advisory services. The initiatives are designed to ease the effects of the crisis on its emerging markets clients – particularly in countries with large low-income population segments.