DCM Red RealFIDC (IFC-45178)

Countries
  • Brazil
Geographic location where the impacts of the investment may be experienced.
Specific Location
Uninformed
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Active
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Apr 25, 2022
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
Red Fundo de Investimento em Direitos Creditorios Real LP
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 97.19 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Loan Amount (USD)
$ 97.19 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Jun 13, 2024

Disclosed by Bank Mar 25, 2022

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to the IFC, the proposed project (the “Project”) consists of a 5-year (2 years of grace period) investment of up to BRL 480 million in senior quotas of Red Real FIDC (“Red Real” or the “Fund”), managed by RED Asset Gestão de Recursos Ltda (“RED Asset” or the “Fund Manager”), an existing IFC client. The Project aims to continue supporting RED Asset’s lending program to small and medium enterprises (“SMEs”).

People Affected By This Project
People Affected By This Project refers to the communities of people likely to be affected positively or negatively by a project.

IFC anticipates that the Project will support an increase in access to finance for Brazilian SMEs, helping to address an SME finance gap estimated at US$437 billion, the ninth largest gap among 128 developing countries, and approximately 25% of the GDP. Moreover, SME finance has decreased during 2020-2021 in a period of recession when banks were restricting their loans and going for less risk portfolios.

IFC anticipates that the Project will contribute to greater resilience in the SME finance market through demonstration and replication channels by unlocking alternative funding sources for lenders in the SME financing segment. The credit market in Brazil is characterized by a high degree of concentration where banks control the lion’s share with the top 5 banks responsible for about 70% of the total credit volume in the country. This market dominance enables banks to realize good profits dampening their appetite for targeting underserved segments such as SMEs. Worse still, banks perceive SMEs as a high-risk segment and retrench from this segment especially during stress periods such as the COVID-19 pandemic. This flight to quality phenomenon was evident during the pandemic as there was a decline of approximately 3% in the share of SME financing by commercial banks in 2021 to 61.7% from roughly 64.7% in 2020.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

According to the IFC, The Project consists of an up to BRL 480 million (up to US$90 million) investment in senior quotas of Red Real, to be structured in two commitments. The first commitment amount is up to BRL320 million (equivalent to up to US$60 million).

Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

According to the IFC, RED Asset Group was established in 1992, specializing in credit operations to SMEs in Brazil and has the following ownership structure: (i) Hai Participacoes e Empreendimentos Ltda (47.6%); (ii) Lavan Participacoes e Empreendimentos Ltda (47.6%); and (iii) the remainder belonging to its managing directors (4.8%).


Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

RED Asset Gestao de Recursos Ltda
Filipe Guimarães
Chief Financial Officer
+55 (11) 3038-5838
filipe.guimaraes@redasset.com.br
Av. Cidade Jardim, 400, 14 andar, Sao Paulo
www.redasset.com.br

ACCESS TO INFORMATION
You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries
If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.
ACCOUNTABILITY MECHANISM OF IFC/MIGA
The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org

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How it works