IFC expands lending portfolio for RP to $125 million next year

The International Finance Corp. (IFC), the investment arm of the World Bank, is expanding its lending portfolio for the Philippines from $67 million this year to $125 million in 2004.

The IFC is now in discussions with prospective borrowers including the developers of the Parañaque to Cavite coastal road, and an information technology group led by Stradcom.

The Parañaque to Cavite project proponents are looking at a $30-million debt facility while the Stradcom IT group is looking at a $25-million loan.

Vipul Bhagat, IFC country manager for the Philippines, said they are also in discussions with several commercial banks, life and non-life insurance companies, and companies seeking loans for debt restructuring.

"We are also open to making investments both as loan or equity with special purpose vehicle (SPAV) companies which would be buying non-performing assets (NPAs) of banks," Bhagat said.

Thus far this year, IFC has used up $67 million out of a $150-million investment budget for the Philippines. The investments that pushed through this year were: Banco de Oro Universal Bank ($20 million); Asian Eye Institute ($1 million); Hong Kong and Shanghai Bank Corp. ($10 million); Legacy Scholarship and Pension Plan ($190,000); Manila Water Co. ($30.59 million); and Software Venture International Inc. ($4 million). The Manila Water loan has a 15-year repayment term, the longest that the IFC has undertaken in the Philippines.

Failed investment opportunities were those involving Eastwood, a proposed cyber park development project; Maynilad Water Co.; a SPAV company for the acquisition of the bad assets of the Bank of the Philippine Islands; and Price Smart Philippines, the proposed retail joint venture company.

In the Asia Pacific region, IFC has committed a total of $573 million, with China taking the lion’s share.

For the Philippines, Bhagat said Bangko Sentral ng Pilipinas (BSP) has approved IFC’s request to set up a peso-denominated loan facility. He said they have an "unlimited" amount which they can lend to Philippine companies including banks. "We are already talking to some local companies."

The Philippines is ranked among the 10 countries where the IFC and the WB have the largest exposures in the world.

In 2001-2002, IFC invested $345 million in 13 business activities, namely Planters Development Bank, a thrift and savings bank focusing on small and medium enterprises; Manila North Tollways Corp., an infrastructure and development firm involved in the expansion of the North Luzon Expressway; APW Trade, a marketing and financial services intermediary for small and medium enterprises; Stradcom Corp., an information technology (IT) company presently modernizing and computerizing the national network of the Land Transportation Office (LTO); and Asian Hospital, the IFC’s first healthcare project in the Philippines.