MICROCAPITAL.ORG STORY: International Finance Corporation (IFC) Purchases Bonds Worth 11.5 Billion Colombian Pesos (USD 6.2 Million) to be Loaned by Remittance Distributor 'Giros y Finanzas'

International Finance Corporation (IFC), the investment arm of the World Bank, has invested in Giros y Finanzas, a remittance distributor and loan provider based in Colombia, by purchasing bonds worth 11.5 billion Colombian pesos, the equivalent of over USD 6.2 million [1,2,3]. The investment will mainly be used to provide loans to clients who receive remittances (money transfers from friends or family in other areas or countries) through Giros y Finanzas for the purposes of small business development or home ownership [1].

This is the first time that the IFC has purchased bonds from a company in Colombia [1]. According to the press release, this will allow Giros y Finanzas to provide more affordable interest rates to its clients than if it had received a regular loan [1]. Hector Fabio Rodriguez, CFO of Giros y Finanzas, has stated that these loans will ideally reach clients in “the most remote areas and a population who do not have access to other sources of financing” [1]. Lending and providing remittances to women is also a priority of the company [1].

Giros y Finanzas was founded in 1996 in Cali, Colombia, a city in the western part of the country [1]. Its primary service is facilitating both national and international remittances as agents of Western Union, a United States company providing financial services including money transfers and money orders [4]. Giros y Finanzas also provides services to its remittance clients as varied as “foreign exchange operations, deposits…and lending” [1]. Giros y Finanzas does not report to the MIX Market, the microfinance information clearinghouse [5]. Financial data is available, in Spanish, on the company’s website [3].

The IFC was founded as the investment arm to the World Bank in 1956 [2]. Through loan and debt securities, equity investments, and guarantees, the IFC “[invests] in companies and financial institutions in emerging markets” [6]. In Colombia, the IFC has taken a public and private development strategy through supporting “infrastructure, health, education, and public-private partnerships to build ports, roads, and airports” [1]. Additionally, the IFC provides finances that reach small and micro enterprises (SMEs) [1]. The IFC has committed an investment portfolio of over USD 1 billion to organizations in the country as of June 2009 [1].

By Christopher Maggio, Research Assistant

Bibliography

[1] IFC press release entitled: ‘IFC Invests in Giros y Finanzas to support micro lending and remittances effectiveness in Colombia’: http://www.ifc.org/ifcext/lac.nsf/Content/SelectedPR?OpenDocument&UNID=E0E7923453445C5585257650005691BC/SelectedPR?OpenDocument&UNID=E0E7923453445C5585257650005691BC
[2] IFC: http://www.ifc.org/
[3] Giros y Finanzas (in Spanish): http://www.girosyfinanzas.com/
[4] Western Union: http://www.westernunion.com/info/selectCountry.asp?origination=global
[5] The MIX Market: http://www.mixmarket.org/
[6] IFC on the MIX Market: http://www.mixmarket.org/funders/ifc

Conversions performed using Bloomberg Currency Calculator: http://www.bloomberg.com/invest/calculators/currency.html