MICROCAPITAL.ORG STORY: Peruvian Commercial Bank, Banco de Credito, to Acquire Microfinance Group, Financiera Edyficar from CARE, International Finance Corporation (IFC), and MicroVest (MV)

Banco de Crédito del Perú (BCP) recently announced its deal with nongovernmental organization CARE, to purchase a 77.2% stake in the Peru-based microfinance company, Financiera Edyficar. BCP is a Peruvian publicly-traded commercial bank founded in 1889 and owned by Credicorp Ltd, a financial holding company in Peru. BCP offers services and products to businesses and individuals, as well as small and medium-sized enterprises [1]. In March 2008, BCP reported total assets of USD 17.3 billion, a debt-equity ratio of 1,422.10%, and a return on average assets of 2.13%. It has a BBB- credit rating from both Standard & Poor’s and Fitch Ratings. As of June 2009, BCP claimed 32% of loans and 36% of deposits in the Peruvian banking system. Approximately 97% of BCP is owned by Credicorp [2].

Financiera Edyficar is controlled by CARE (Cooperative for Assistance and Relief Everywhere), a nongovernmental organization headquartered in Atlanta, U.S. CARE was established for the purpose of fighting poverty in the world’s poorest regions, with a particular focus on the challenges faced by poor women. As of December 2008, CARE reported total assets of USD 738, 564, 000 [3]. In addition to CARE, holders in Edyficar include the International Finance Corporation (IFC) and MicroVest, a microfinance investment firm. For MicroCapital coverage on these organizations, click here. Financiera Edyficar is a microfinance institution based in Lima, Peru. It was founded by CARE in 1998. As of July 2009, it had a loan portfolio of approximately USD 210 million. As of 2008, it was serving 180, 885 clients across 13 regions of Peru. In 2008, EDYFICAR was ranked ninth measured by total assets among microfinance institutions in Latin America by the Inter-American Development Bank [4].

BCP’s chief executive officer, Walter Bayly announced that their nearly USD 80 million purchase of Edyficar from CARE was part of a USD 96 million offer for the whole of Edyficar. According to filing done by BCP with Conasev, a public institution based in Lima, Peru which supervises the stock market, the deal is subject to regulatory approval. As such, for the transaction to be completed, BCP must make a public offer to buy the rest of Edyficar’s shares held by other shareholders. Should these requirements be met, Mr. Bayly projects the transaction to foster BCPS’s increased participation in the Peruvian microfinance market from its current 16% to 20.6%.

CARE’s Peruvian director, Milo Stanojevich says “In selling our shares of EDYFICAR, CARE sought not only a fair financial offer but also a commitment to the social mission that made EDYFICAR successful…This agreement is an opportunity for CARE to make an even greater contribution to the fight against poverty in Peru and other parts of the world in great need.”

Dr. Helene Gayle, president and CEO of CARE adds that Edyficar has reached a point of sustainability and, with the help of BCP, no longer requires the support of a non-profit organization. CARE plans to re-invest earnings from the sale of Edyficar into other poverty-fighting programs in need of support, such as fighting for gender inequities; expanding microfinance in sub-Saharan Africa’ and strengthening programs for marginalized women in the areas of education, maternal health care, and access to financial services [5]. Further details about the earnings have not been disclosed. For a detailed look at CARE’s income statement and balance sheet, please visit http://www.care.org/about/financialinfo/990_fy2008.pdf.

By: Diya Chopra, Research Associate

Bibliography:

[1] Reuters

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN0724978020090907

[2] Google Finance

http://www.google.com/finance?q=LIN:CREDITC1

[3] CARE

http://www.care.org/about/financialinfo/990_fy2008.pdf

[4] CARE

http://www.care.org/newsroom/articles/2009/09/EDYFICAR-2009-09-07.asp

[5] Business News Americas

http://www.bnamericas.com/news/banking/BCP_to_acquire_77*_stake_in_Financiera_Edyficar