IDB Invest, a member of the Inter-American Development Bank (IDB) Group, provided a $15 million loan, equivalent to COP 46.5 billion, to Finanzauto S.A. to expand its financing offer to micro, small and medium enterprises (MSME) of various economic sectors in Colombia where vehicles are a work asset.
The operation will contribute to the growth of financing to Colombian MSME. Micro, small and medium enterprises represent 14 percent of total credit in Colombia; yet are responsible for 80 percent of total employment and 35 percent of the country's GDP. Finanzauto has a business model aimed at individuals, micro and small entrepreneurs from various sectors, and small entrepreneurs in the transport sector where the vehicle is an essential element of the production chain.
The proposed financing will also mobilize additional resources for a value close to $22 million, equivalent to COP 68.2 billion, through the sale of shares to international capital funds, with which Finanzauto does not currently have a financial relationship. The mobilization of resources will help diversify its funding, allowing it to expand to new financiers.
The operation with IDB Invest will also help Finanzauto update its corporate governance processes and its environmental and social management system, in line with modern international practices.
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank (IDB) Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable enterprises and projects to achieve financial results that maximize economic, social and environmental development for the region. With a portfolio of assets of $12.1 billion under management and 329 clients in 21 countries, IDB Invest works across sectors to provide innovative financial solutions and advisory services that meet the needs of its clients.
Finanzauto is a regulated entity and supervised by the Colombian Superintendence of Companies with more than 48 years in the automotive financing market. Finanzauto was created in 1970 as a result of the initiative of the shareholders of Grupo Seissa, to make its commercial business independent of distribution and concession of vehicles and machinery of automotive financing. Finanzauto is the main financing entity for unbanked vehicles in Colombia; it generates 450 direct jobs and has 150 points of service in the country, and branches in six cities (Bogota, Barranquilla, Bucaramanga, Cali, Medellín and Villavicencio) and is widely recognized nationally by the automotive market. As of December 2018, it had a total gross portfolio of $280.85 million and an equity of $121.04 million. The ROA was 3.51% at December 2018, and the ROE at 9.16%.