IDB Invest, a member of the Inter-American Development Bank (IDB) Group, has granted revolving financing of $25 million to the non-banking financial institution Eurocapital. This operation will strengthen Eurocapital’s transnational strategy for product growth and diversification. The funds will expand financing for small and medium enterprises (SMEs) in Chile and Peru through factoring.
The most developed factoring market in the region is Chile, where it represents more than 10 percent of GDP and includes more than 25,000 customers, mostly SMEs. The Peruvian factoring market, however, is relatively incipient and has been driven by a new legal framework. The low level of bank penetration in the MSMEs segments opens a broad base of potential clients to this instrument.
The transaction, led by IDB Invest, includes a syndication with Banco Latinoamericano de Comercio Exterior (BLADEX). IDB Invest and Eurocapital have been working together since 2006, but this is the first syndicated operation that they will carry out together. The mobilization of additional resources through BLADEX will provide Eurocapital with greater diversification and predictability to its funding sources.
This operation potentially contributes to three of the United Nations Sustainable Development Goals: Decent work and economic growth (SDG 8), Industry, innovation and infrastructure (SDG 9) and Partnerships for the goals (SDG 17).
SMEs are an essential part of Chilean and Peruvian economic growth, where access to financing is one of the main barriers to their growth. Factoring is a fundamental instrument to reduce the financing needs of SMEs. Its use allows companies to obtain financing more quickly and represents a flexible and flexible financing alternative to cover working capital needs.
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank (IDB) Group, is a multilateral development bank committed to the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects so they can achieve financial results and maximize the region’s economic, social, and environmental development. With a portfolio of $12.4 billion in assets under administration and 342 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services in response to its clients’ needs in a variety of sectors.
Eurocapital S.A., is a financial services company established in Chile over 20 years ago by a group of renowned businessmen and executives with extensive experience in the country's financial sector. It is a financial institution committed to delivering the best solution to customers through specialized financial products and services such as factoring, leasing, working capital credit and automotive credit. With a presence in 18 cities through regional branches, Eurocapital has financed the development of small and medium enterprises in all areas of the economy throughout the country. In 2016, Eurocapital started operations in Peru with the opening of a subsidiary in Lima, and currently has a regional presence in Piura, Arequipa and Trujillo. Entering Peru meant boosting factoring products, in a market with good growth expectations. Eurocapital is currently the second largest non-bank lending institution in Chile, with an asset level of more than $290 million, an annual business flow of more than $1,150 million, and more than 8,000 clients as of June 2019. In addition to having a strong track record in the financial industry since 2008, Eurocapital has been a member of the international factoring chain “Factors Chain International” since 2011, for the development of the international factoring business.