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IFC Invests in Egypt’s First Export Factoring Company


 In Washington
Ann Pasco

Phone: +1 (202) 473-91 67

Fax:    +1 (202) 974-4384

Email:  
Apasco@ifc.org


Washington, D.C., June 21, 2005 — The International Finance Corporation, the private sector arm of the World Bank Group, recently signed an agreement to invest $3 million for a 20 percent equity stake in Egypt Factors, a new nonbank financial institution that will provide factoring services for export-oriented businesses in Egypt. Other sponsors are First International Merchant Bank and Commercial International Bank Egypt S.A.E., each of which is taking a 40 percent equity share.  

IFC’s investment will establish Egypt’s first factoring company and help promote this alternative trade finance product to benefit small and medium enterprises in the country’s dynamic export sector. Export factoring, a new financial service in Egypt, enables exporters to mitigate the financial risks associated with trading on an open account basis. The company aims to be a “one-stop shop” for Egyptian exporters, including SMEs, and is expected to have a strong positive impact by enhancing the level of credit being made available locally.  Drawing on the technical expertise and other strengths of its stakeholders, Egypt Factors will introduce industry best practices in Egypt and provide a model for others to replicate.  


Sami Haddad, IFC Director’s for that Middle East and North Africa, said, “Enhancement and diversification of exports is key to Egypt’s future economic performance, and factoring is an effective product for helping export-oriented SMEs increase their business volume.”


Commercial International Bank is the fifth-largest bank in Egypt, primarily serving large private sector enterprises, multinationals, and export oriented companies. A spokesperson for CIB noted, “Providing specialized invoice financing through Egypt Factors will provide our clients with an alternative trade finance option.   This product is currently unavailable in the local market, and CIB is proud to be one of the sponsors of this new venture.”  


First International Merchant Bank, based in Malta, is a provider of trade-related financial services to clients in emerging markets. Margrith Lutschg, President of FIMBank, stated, “We are absolutely delighted to be in this project and working with such formidable partners to bring this important product to Egyptian exporters. We are convinced that this will benefit the Egyptian economy.”


The mission of IFC (
www.ifc.org) is to promote sustainable private sector investment in emerging markets, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in transition and developing countries, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.