WASHINGTON, D.C., April 28, 1999 – The
International Finance Corporation will provide US$1.7 million to Lanka
Orix Factors Company (LOFAC) to develop its export factoring business which
benefits small and medium enterprises (SMEs) in the country's dynamic export
sector. Export factoring, a new financial service in Sri Lanka, enables
exporters to cover financial risks and exploit international trade opportunities
by providing SMEs with financing for their exports, which makes them more
LOFAC, established in 1991, is the pioneer factoring company in Sri Lanka.
It advances funds against receivables and provides ledger administration,
credit management and debt collection for SMEs engaged in trading, manufacturing,
and services. LOFAC's expansion into export factoring will facilitate Sri
IFC's financing consists of a loan of $1.5 million and an equity subscription
of up to $200,000 for a 15 percent shareholding in the company. LOFAC is
64.8 percent owned by Lanka Orix Leasing Company Ltd. (LOLC), a leading
leasing company in Sri Lanka.
Mr. Rashad Kaldany, IFC Director for South and Southeast Asia, noted that
diversification of exports is the key to Sri Lanka's future economic performance
and that export factoring is one of the most effective ways to help export-oriented
SMEs to grow. He said the project would directly benefit about 50 SMEs
in agri-processing, sporting goods, electronic goods, and other sectors.
IFC, which has been investing in Sri Lanka since the early 1970s, opened
an office in Colombo in October 1998 to focus on growing investment opportunities
in infrastructure, health, and the financial markets. IFC has already established
several pioneering private financial institutions in Sri Lanka, including
the first leasing company, LOLC in 1980; the first private insurance company,
Union Assurance Co., in 1988; and the first domestic mutual fund, Pyramid
Unit Trust, in 1992.
IFC, part of the World Bank Group, fosters economic growth in the developing
world by financing private sector investments, mobilizing capital in the
international financial markets, and providing technical assistance and
advice to governments and businesses.