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IFC to pump $30m into SME sector
July 8, 2009

By Mzwandile Jacks

The International Finance Corporation (IFC) would invest $30 million (R239.3m) in Sasfin to enable the specialist bank to spread lending to small and medium enterprises (SMEs), it said yesterday.

The member of the World Bank Group said this investment would consist of up to $10m in equity investment, enabling the IFC to hold up to a 12 percent shareholding in Sasfin, and a loan of $10m.

The IFC said the other $10m would be for trade finance guarantees that were already in place.

The 12 percent stake in Sasfin would allow the IFC a reasonable amount of influence in the specialist bank's corporate governance and operational processes.

Mohamed Gouled, the manager of financial markets at the IFC, said it did not take more than 20 percent in the companies it had invested in.

"We view ourselves as supporters rather than drivers," Gouled said.

The IFC is a shareholder in Blue Financial Services, the pan-African microfinancier.

It had also made investments with other banks, including Standard Bank, Nedbank and African Bank.

Sasfin would use the funds to increase the number of products it offered to smaller businesses, strengthen its social lending practices and boost foreign trade of South African companies.

Roland Sassoon, the chief executive at Sasfin, said that since the advent of the credit crunch, the SME market had been struggling.

"The bigger banks are neglecting this market and this is one of the reasons we entered into this deal," Sassoon said.

James Scriven, the director for global financial markets at the IFC, said it had partnered with Sasfin because it liked the role Sasfin played in the local economy.