São Paulo, February 6 2020—IFC, a member
of the World Bank Group, invested BRL160 million (equivalent to approximately
$40 million) to acquire senior quotas of the Red Performance, a Fundo de
Investimento em Direitos Creditórios (FIDC)1 managed by Red
Asset, one of the top structured credit fund managers in Brazil. IFC’s
investment will support the expansion of access to finance for micro, small
and medium enterprises (MSMEs), a key sector for job creation and economic
growth in Brazil.
The Red Performance FIDC provides directly or indirectly short-to-medium-term
investment opportunities for thousands of MSMEs across varied sectors throughout
Brazil. The FIDC acquires receivables and other credit rights originated
by Small and Medium Enterprises (SMEs) that provide services or sell products
to MSMEs in Brazil. The net worth of the FIDC amounts to BRL895 million
(equivalent to approximately $224 million).
MSMEs play a critical role in Brazil’s economy as they generate jobs and
provide essential goods and services, fostering economic growth and contributing
to a dynamic private sector. According to IFC MSME Finance Gap Database,
these companies account for 27% of Brazil’s GDP and 54% of formal jobs
in the country. Yet, they face unmet financing needs of over $482 billion,
which inhibits the increase in productivity and limits their growth. Granting
MSMEs access to financial services is vital to closing that gap and promoting
the sector’s growth.
“We are excited that our partnership with Red Asset will help spur the
growth of MSMEs and job creation in Brazil and promote the expansion of
the FIDC market,” said Rogerio Santos,
IFC’s head of Financial Institutions for Brazil and the Southern Cone.
“This is well aligned with IFC’s strategy to increase access to finance
to MSMEs in Brazil, stimulate the development of capital markets, and encourage
competitiveness in financial markets,” he added.
Over the last five fiscal years, IFC invested over $2.5 billion in the
Brazil’s financial sector, in long-term investments, including mobilization
from third-parties. In the fiscal year 2019, IFC’s long-term investments
in Brazil, across all sectors, totaled $2.5 billion, including $1.9 billion
mobilized from other investors. IFC has been investing in Brazil’s private
sector since 1957 to address the country’s most critical development challenges,
including those of the urbanization, social inclusion, competitiveness
and productivity, and management of natural resources.
1 FIDC is a type of receivable investment fund used for securitization
purposes; it is regulated by the Brazilian National Monetary Council and
the Brazilian Securities and Exchange Commissions.
About Red Asset
With more than 27 years of market experience, Red Asset (RED Group) is
specialized in the analysis, acquisition, and recovery of credit rights
in the MSME segment. The experienced management team has ample knowledge
of the Brazilian market, as well as deep industry expertise in FIDC and
credit rights. Red Asset manages five FIDCs, totaling BRL2 billion (approx.
$500 million) of assets under management. Combined, they originated
over BRL9 billion (approx. $2.3 billion) worth of credit rights in 2019.
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
where they are needed most. In fiscal year 2019, we delivered more than
$19 billion in long-term financing for developing countries, leveraging
the power of the private sector to end extreme poverty and boost shared
prosperity. For more information, visit www.ifc.org.