Developmental Investment Activities
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Chile
Banco del Desarrollo is one of the principal Chilean banks for the financing of microenterprises and small and medium-size companies. The bank plans to increase its share of small and medium-size company financing and wants to develop new products to serve microentrepreneurs, continue financing middle- and low-cost housing, and bring service to low-income individuals.
The Board of Executive Directors of the Corporation authorized an agency line with Banco del Desarrollo under which the Corporation will provide $10 million and the bank will provide $10 million. Loans of $600,000 to $3 million will be made pari passu by the two organizations to small and medium-size companies seeking to modernize or expand. This operation is a good example of how useful agency lines are in helping the IIC meet its developmental goals; they enable the IIC to efficiently provide medium- and long-term funding to small and medium-size companies that meet its eligibility requirements.
| IIC agency line | $10 million |
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Number of end beneficiaries | 7–30 |
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Job creation | 150–450 |
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Export earnings | $5 million–$15 million per year |
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GDP contribution | $15 million–$45 million per year |
Delta Leasing Habitacional, S.A. is a real estate leasing company that purchases medium- and low-cost housing and leases the homes to individuals through a lease-to-own arrangement. A $7 million loan and a $1 million equity investment from the Corporation will enable Delta Leasing to expand its operations and finance the accumulation of lease contracts prior to securitization. Delta Leasing will also develop and sell lease-backed securities, a new instrument in Chile.
The lease-to-own arrangements benefit lower middle to low-income families who do not have enough savings for a down payment on a home or lack the financial strength to obtain a bank loan. The financing from the Corporation will facilitate the creation of about 15,000 long-term leasing contracts via the development of lease-backed securities, as well as strengthen and deepen Chilean capital markets. It is estimated that the project will generate $13 million annually for Chile's GDP.
The IIC will make an equity investment in Negocios Regionales Fondo de Inversión Privado, a private investment fund that will invest in small and medium-size Chilean firms. The fund has a term of ten years, and its expected capitalization is $23.5 million.
This project aims to support the development of small and medium-size companies in Chile by setting up a venture capital fund in which the IDB's Multilateral Investment Fund will also invest. Negocios Regionales will target regions in the country outside metropolitan Santiago. In these regions, production development has not been as dynamic as in the capital, and companies find it even harder to gain access to long-term financing, especially if they are small or medium-size.
The companies in which the fund will invest must comply with local environmental and labor requirements and international standards, in accordance with the IIC's environmental and labor review policies.
| IIC equity investment | Up to $4 million |
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Number of end beneficiaries | 10–20 |
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Job creation | 120–180 |
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Foreign exchange generation | $5 million–$10 million per year |
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GDP contribution | $15 million–$35 million per year |
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