Avla Chile WHL (IDBI-12872-01)

Countries
  • Chile
Where the impacts of the investment may be experienced.
Financial Institutions
  • IDB Invest (IDBI)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Bank Risk Rating
FI
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Voting Date
Dec 22, 2020
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower
AVLA Seguros de Crédito y Garantía S.A.
The holder of the loan, grant, or other investment.
Investment Type(s)
Guarantee, Loan
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD)
$ 40.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Loan Amount (USD)
$ 40.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Primary Source

Original disclosure @ IDBI website

Updated in EWS Nov 25, 2020

Disclosed by Bank Nov 13, 2020


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Project Description

The proposed project includes a financing mechanism that will consist on a senior, secured, revolving warehouse facility of up to US$40 million, whose proceeds will be used to purchase and accumulate eligible endorsable mortgage loans or other similar instruments to small and mid-sized companies in Chile for a future asset backed securitization. The transaction will support and improve SMEs access to financing in Chile, narrowing the current financing gap that is increasing due to the COVID-19 crisis, and will help further expand debt capital markets in the country through new issuances of asset backed securities. The proceeds from the line will allow AVLA Group to expand its SMEs' credit insurance business segment. The warehousing facility may support several accumulation periods, for a maximum of six years.

The sub-loans are expected to average US$400,000 with a tenor of roughly four (4) years.

Early Warning System Project Analysis



      1. Scope of Environmental and Social Review. AVLA is a new client of IDB Invest and does not have an operating Environmental and Social Management System (“ESMS”).  As a condition of this operation, AVLA will develop and implement an ESMS, and appoint a team member with the necessary capacity to manage and supervise E&S risk.

 

      1. Environmental and Social Categorization and Rationale. The proposed operation is classified as an FI-2 per IDB Invest’s Sustainability Policy, given the primary focus on SMEs. Category A sub-projects, per IDB Invest’s definition, will be excluded.

 

      1. Environmental and Social (E&S) Risks and Impacts. The main E&S risks of this projects are associated with AVLA’s capacity to identify and manage the E&S risks associated with its activities.  The Environmental Social Health and Safety (“ESHS”) impacts and risks associated with loans to SMEs are likely to be moderate in nature.  AVLA’s portfolio is concentrated in commerce and services (62%), as well as exposure to construction (12%), agriculture (13%), and manufacturing (5%).   

 

      1. Mitigation Measures. AVLA does not currently have an ESMS and will develop one..  The ESMS will apply at a minimum to the financial guarantee and private credit insurance business lines.  AVLA will be required to ensure that all loans supported under the operation comply with IDB Invest’s Exclusion List, applicable E&S local laws, and the ESMS.  Sub-loans will be limited to US$2 million. The scope of the ESMS is defined in the below action plan.

 

      1. Environmental and Social Action Plan https://idbinvest.org/en/projects/avla-chile-whl 



Investment Description
  • IDB Invest (IDBI)

Loan & Guarantee

Private Actors

Borrower: AVLA Seguros de Crédito y Garantía S.A. 

Contact Information

Contact name: Luis Bryce
Title: Global Head of Capital Markets
Phone number: +51 952 136 539
Email address:
lbryce@avla.com

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://www.iadb.org/en/access-information/information-request

ACCOUNTABILITY MECHANISM OF IDB / IDB INVEST

The Independent Consultation and Investigation Mechanism (MICI) is the independent complaint mechanism and fact-finding body for people who have been or are likely to be adversely affected by an Inter-American Development Bank (IDB) or Inter-American Investment Corporation (IDB Invest)-funded project. If you submit a complaint to MICI, they may assist you in addressing the problems you raised through a dispute-resolution process with those implementing the project and/or through an investigation to assess whether the IDB or IDB Invest is following its own policies for preventing or mitigating harm to people or the environment. You can submit a complaint by sending an email to MICI@iadb.org. You can learn more about the MICI and how to file a complaint at http://www.iadb.org/en/mici/mici,1752.html (in English) or http://www.iadb.org/es/mici/mici,1752.html (Spanish).