Finanzauto secures USD 20 million senior loan from GCPF
GCPF closed a USD 20 million senior secured loan with Finanzauto S.A, Colombia’s leading non-banking financial institution in the car lending sector.
The deal used IBR, a local currency floating interest rate benchmark, and was executed in collaboration with TCX Fund, mitigating the FX risk that Finanzauto faces. This is particularly important in Colombia given the sharp depreciation of the Colombian peso vis-à-vis the US Dollar. The loan will support the company’s transition to an energy efficient fleet by financing hybrid and electric vehicles, contributing to Colombia’s GHG emissions reductions in the transport sector.
Finanzauto provides vehicle financing to self-employed workers and micro/small business owners with limited access to traditional financing. With over 50 years of experience in the business, Finanzauto aims to reduce the carbon footprint of its core business activity by diversifying its product offerings with more green products. Together with the GCPF’s climate and investment teams, Finanzauto has developed a green lending strategy aligned with the company’s business model focused on low CO2 emitting light-duty vehicles.
This new partnership is well timed as it aligns with the steps that Colombia is taking to decarbonize its economy. In 2020 Colombia committed to “greening” its passenger mobility sector as part of its pledge to achieving net zero emissions by 2050 and aims to get 600 000 EVs on the road by 20301. As the second largest emitting sector in Colombia, decarbonizing the transport sector is pivotal in achieving its net zero targets.
In addition to financing energy efficient vehicles, GCPF’s energy specialists and technical assistance facility will support Finanzauto with finetuning its GHG accounting, promoting of hybrid and EVs, and the implementation of a vehicle scrapping program. This is GCPF’s first transaction in Colombia, thereby extending the fund’s lending portfolio to 10 countries in Latin America and 27 globally.
The Global Climate Partnership Fund is a Luxembourg-based fund managed by the Swiss asset manager responsAbility Investments AG. The Fund is an innovative public-private partnership dedicated to mitigating climate change through a reduction of greenhouse gas emissions in emerging and developing markets. It focuses on financing energy efficiency and renewable energy projects, through local financial institutions or directly. Only projects that generate significant energy savings and pledge to reduce projected greenhouse gas emissions by at least 20% are eligible for funding.
GCPF was established by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), KfW Entwicklungsbank and the International Finance Corporation (IFC) in 2009 as a public-private partnership. Junior catalytic capital is provided by BMU, the department for Business, Energy and Industrial Strategy (BEIS) of the UK, Denmark’s development cooperation (Danida). Other private and public investors include ASN Bank, Ärzteversorgung Westfalen-Lippe, FMO, OeEB, Sparkasse Bremen, the European Investment Bank (EIB) and Heilsarmee.
responsAbility Investments AG is a leading impact asset manager specializing in private market investments across three investment themes to directly contribute to the United Nations Sustainable Development Goals (SDGs): Financial Inclusion, to finance the growth of Micro & SMEs; Climate Finance, to contribute to a net zero pathway; and Sustainable Food, to sustainably feed an ever-growing population. All responsAbility investment solutions target specific measurable impact alongside market returns.
Since its inception in 2003, responsAbility has deployed over USD 13 billion in impact investments. With over 200 employees collaborating across seven offices, as of 1 March 2023 the company manages USD 4.8 billion in assets across approximately 280 portfolio companies in 74 countries. Since 2022 responsAbility is part of M&G plc, the international savings, and investments business, and contributes to enhancing M&G’s capabilities in impact.
Finanzauto is a company of the SEISSA Group, with more than 50 years of experience in financing vehicles and is based in Bogotá. Finanzauto is positioned in the automotive market as a first-level lender and is the most relevant non-banking entity in this sector in Colombia. In 2020, it changed its name to Finanzauto S.A. BIC to incorporate the Collective Interest Benefit (BIC) and become a strategic ally in the protection of the environment, the welfare of workers, and the improvement of living conditions of society in general by creating new opportunities for individuals including women, commercial workers, transporters, entrepreneurs, micro-entrepreneurs and small producers in the Colombian countryside which, in addition to providing access to financing, aims to promote the growth of their businesses and revitalize the local economy.
TCX is a global development finance initiative supported by a shareholder base that includes all major development finance institutions as well as the EU and Dutch, Swiss, British, French and German governments. TCX offers a solution to currency risk that comes with development finance lending in hard currency to borrowers in emerging markets. The Fund enables synthetic local currency financing and offers cross-currency swaps and FX forwards in currencies where such products are not available or poorly accessible.
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