WCS COVID HKL

pending

The proposed project entails an IFC investment of up to US$25 million senior loan to Hattha Kaksekar Limited (the “Company” or “HKL”) with 30 percent of the loans being targeted at women and women-owned businesses. The investment aims to support the Company's working capital and trade-related lending program to Cambodian micro, small and medium enterprises as a result of the COVID-19 pandemic (the Project) and will be supported by an IDA Private Sector Window (PSW) Blended Finance Facility. IFC as implementing entity of the IDA Private Sector Window (PSW) Blended Finance Facility is expected to support working capital loans in PSW eligible countries under the WCS Facility with a first loss guarantee of up to US$215 million (“blended concessional finance co-investment”). Without the de-risking provided by IDA PSW, IFC will be limited in its ability to support Working Capital loans in IDA PSW countries given the increased demand for financing and the high risk in IDA PSW countries. This support is targeted in the context of responding and helping with the resilience measures around COVID-19 crisis. The level of concessionality provided to the WCS Facility by the blended concessional finance co-investment is estimated to be approximately 3% of the total PSW eligible facility size, which will be up to US$860 million. This estimate is based on the difference between (i) a “reference price” (either a market price if available; the price calculated using IFC’s pricing model, which comprises three main elements: risk, cost and profit; or a negotiated price) and (ii) the “concessional price” being charged by the blended concessional finance co-investment. In addition, the Project is expected to be supported by Global SME Finance Facility (“GSMEF”) in the form of a performance-based incentive (“PBI”) of up to 0.2% of the total project cost of US$25 million to incentivize on-lending of the proposed working capital loans to women and women-owned/women-led enterprises.  The estimated subsidy provided by GSMEF assumes that the Project will fully reach the agreed impact and shall only be paid out upon achievement of the pre-defined gender target. GSMEF is a partnership between IFC and other multilateral and bilateral partners, including the United Kingdom's Department for International Development and the Netherlands Ministry of Foreign Affairs, to help expand financing to SMEs on a sustainable basis. Further details and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blendedfinance. As is the case with all of IFC’s blended concessional finance co-investments, this project has been assessed against the Enhanced Blended Concessional Finance Principles for DFI Private Sector Operations adopted by IFC and more than 20 other DFIs in 2017.  Further information on these Enhanced Principles and IFC’s blended finance approach and governance can also be found at: www.ifc.org/blendedfinance. To support this increase in trade volumes at this most critical time, IFC is starting this support through existing clients while remaining open to engaging with other eligible financial institutions providing working capital in emerging markets.”