The International Finance Corp. (IFC) is ramping-up investments in non-bank lenders in the Philippines, in line with its push to support more small businesses and boost financial inclusion.
The IFC disclosed on Aug. 28 that its board will approve on Sept. 27 a loan investment in Asialink Finance Corp. (AFC), a leading non-bank financial institution belonging to the Asialink Group of Companies majority owned by entrepreneur Ruben Lugtu II and his family.
The forthcoming investment of the World Bank Group's private-sector lending arm in AFC will be a four-year senior loan financing package of as much as $130 million (over P7.3 billion), which includes $100 million from the IFC's own account plus mobilization of the remaining $30 million from B1 loan participants and parallel lenders.
The IFC said it will "also provide a cross-currency swap to help AFC hedge the currency and interest rate risk" from its upcoming investment.
According to the IFC, 100 percent of its proposed investment in AFC will finance micro, small and medium enterprises (MSMEs), especially women-owned and led businesses, nationwide.
"The IFC anticipates that the project will help AFC grow its loan portfolio of MSMEs, including women-owned/led MSMEs. This will help reduce the access to finance gap for this segment," it said.
"At the market level, the IFC anticipates that the project will promote greater competitiveness in the MSME financing space by demonstrating the viability of lending to this space, and encouraging other players to follow suit or develop more strategies, models, and products that is able to cater to the requirements of MSMEs," it added.
The IFC noted that AFC's parent-firm Asialink Group, which also includes Global Dominion Financing Inc. and South Asialink Finance Corp., has more than 362 branches across the country.
In the first quarter of 2024, South and Southeast Asia-based private equity fund Creador invested equity in Asialink Group, hence acquired an 18-percent stake in AFC. As such, the Lugtu family now owns 70 percent of AFC, while the remaining 12 percent belongs to its chief executive officer (CEO) and co-founder Robert Jordan Jr.
This year, the IFC injected $7 million in equity investment each to Salmon and First Circle, two financial technology (fintech) firms operating in the Philippines, to enhance financial inclusion and SME lending, respectively.