IFC may invest $10m in Credito Real to expand microfinance in Mexico

Microfinance Focus, Oct 29, 2010: World Bank’s financial arm, International Finance Corporation has proposed an investment in Crédito Real, S.A. de C.V. (CR) a finance company which is fast moving into microfinance in Mexico. The proposed project is a Credit Line for up to MXN 130 million (USD 10 million equivalent) for IFC’s account. The proceeds from the credit line will be used to increase, diversify and extend the duration of CR’s funding base by obtaining medium-term financing for on lending to micro enterprises in Mexico.

Credito Real is headquartered in Mexico City and operates its micro credit business in 17 Mexican states with most of its portfolio in the states of Guerrero, Mexico, Puebla, and Michoacan. It offers various forms of direct and indirect financing, consisting of small loans in principal amounts typically ranging from approximately $250 to approximately $2,500. In 2007, CR begun offering microcredit group loans and is now planning to expand this line of business.

IFC anticipates that the project will not only help in scaling up microfinance in Mexico but will also demonstrate the business case for microfinance during crisis and encourage private investors to invest in this sector. Moreover, Access to financial services for micro-enterprises and low-income households: will benefit the target market, in terms of increased access to financial services which will stimulate business activity and create jobs.

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