Announcement of Colombian Company to get US$9.8 Million IFC Investment and Agency Credit/Equity Lines August 12, 1988

August 12, 1988 Ekwow Spio-Garbrah Press release no. 89/03 (202) 473 77 16 COLOMBIAN COMPANY TO GET US$9.8 MILLION IFC INVESTMENT AND AGENCY CREDIT/EQUITY LINES The International Finance Corporation (IFC) has approved a financial package involving equity investment in and agency credit and equity lines worth US$9.8 million for Corporacion Financiera del Valle, S.A. (CFV), a development finance institution in Colombia. IFC, an affiliate of the World Bank, is the largest source of multilateral financing for private investment in developing countries. The package consists of an equity purchase of 5.7 percent of CFV shares valued at the approximate eqivalent of US$2.32 million; an agency equity line of up to the equivalent of US$2.5 million, to be matched on a parallel basis by CFV for investment in Columbian medium-size private sector enterprises; and a variable rate 10-year agency credit line of US$5.0 million, to be matched on substantially the same terms and conditions by CFV for financing medium-size private sector Colombian enterprises. At IFC's option, the latter line may be used within the first five years, as principal is repaid, to increase the agency equity line. The IFC equity investment will assist CFV in developing its venture capital and investment banking activities as part of its plan to transform itself from a development finance company to an investment banking institution. The financial package will enable CFV to provide services such as equity investments, venture capital, bond underwriting, and advisory services on corporate restructuring. - 2 - IFC is supporting CFV's investment banking plans at a time when the Colombian Government is attempting to revive equity funding for the private sector through measures including reduction of corporate tax, elimination of double taxation on dividends, incentives for corporations to offer shares to the public, and support for institutional investors, including mutual funds. Since 1976, when IFC made its first investment in Colombia, in a forestry project, its investment portfolio in that country has expanded steadily to include projects in the sugar, steel, chemicals, fish and food processing, textiles, tires, brewery, petroleum, and hotel industries. With the addition of the financial package for CFV, IFC's investment portfolio in Colombia will total $63.9 million in loans, equity, and credit lines. 1535P