IDB Invest Supports Caja Huancayo with the First Capital Investment in a Municipal Savings and Credit Bank in Peru
IDB Invest announces its intent to become a shareholder of Caja Huancayo to expand financial inclusion in Peru, supporting one of the leading microfinance entities in the country. This will be achieved by converting its current loan totaling S/57.14 million (approximately $15 million) to an equity investment in Caja Huancayo.
The microfinance industry has been the fundamental axis in helping to close the financing gaps for micro, small and medium-sized enterprises (MSMEs), especially those located far from urban centers. The Municipal Savings and Credit Banks (CMAC) are the most important sector of the Peruvian microfinance industry, and historically have played a fundamental role in the financial inclusion of Peru, especially in peri-urban areas, secondary populations and the rural sector.
Municipal Savings Banks are regulated by a special legal framework, different from that governing private microfinance institutions and the banking sector; yet, CMACs have managed to position themselves in segments where traditional banking has less presence. Likewise, it is worth noting that the modification of the Municipal Savings Law in 2017, and subsequent modifications, allowed the entry of strategic partners, such as IDB Invest, in the shareholding of the Municipal Savings Banks, bringing with it the possibility of greater growth, innovation and transformation of the sector, which allows consolidating the achievements achieved since the creation of this system at the beginning of the 80s.
In this sense, IDB Invest is established as the first multilateral and the first entity to invest in capital in the CMAC system since the change of Law, supporting Caja Huancayo's focus on MSMEs and vulnerable populations, as well as strengthening the capital of the Fund to leverage the growth of its loan portfolio, and in this way promote greater financial inclusion in Peru.
Additionally, with the participation of IDB Invest, Caja Huancayo continues to strengthen its corporate governance system, through an action plan structured with international standards and best practices in the matter. Likewise, IDB Invest will contribute to a roadmap to strengthen the Environmental and Social Management System (SGAS).
Caja Huancayo will receive advice from IDB Invest thanks to the support of the Women Entrepreneurs Financing Initiative (We-Fi), for the development of an impact measurement system integrated into credits and financial services, and the design of a strategy gender and diversity through a value proposition for the segment of MSMEs led by women.
The operation is expected to contribute to the following United Nations Sustainable Development Goals (SDGs): No poverty (SDG 1), Gender equality, Decent work and economic growth (SDG 8), Industry, innovation and infrastructure (SDG 9), Reduce inequalities (SDG 10), and Responsible production and consumption (SDG 12).
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank 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 companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $16.3 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Caja Huancayo
Caja Huancayo is an entity with good financial strength, holding the B+ Risk Category, with its 35 years of institutional life it has been adding to financial inclusion, with a strong brand presence at the level of the microfinance system in Peru, it has 227 offices throughout the country, it also has the trust of more than 2.5 million clients, concentrating 24% in loans and 76% in deposits, it should be noted that it has more than 287 thousand exclusive clients in placements that work only with Caja Huancayo, with S/ 12,635 being the average credit granting amount, it also promotes strategic alliances to strengthen commercially viable business models that generate value, and produce an economic impact in vulnerable sectors such as the Amazon and promotes female empowerment through its “Emprende Mujer” product, thus fulfilling its mission of improving the lives of its clients.