IFC to invest $2 million into Iran’s Karafarin Leasing Company
The International Finance Corporation (IFC) has approved an investment in an Iranian leasing company. The project consists of structuring and establishing the joint venture Karafarin Leasing Company (KLC), which will focus on medium-term equipment leases that would include medical, office, manufacturing, transport and construction equipment. Particular emphasis would be given to servicing the needs of small and medium enterprises (SMEs).
The company would be capitalized at $10 million equivalent. IFC is proposing to invest up to two million dollars in KLC's share capital for a 20 percent ownership, in addition to a loan of up to three million dollars. The project sponsors are Karafarin Bank and Natexis Banque Populaires, each with a 40 percent equity stake in KLC.
The project was developed in response to the shortage of term finance to the private sector in Iran and will have a significant impact on developing the leasing industry. The project will be an important source of medium-term funds for the private sector, particularly small and medium enterprises.
The Iranian financial system consists of 13 banks, 10 of which are state-owned and three of which are privately owned. Small and medium enterprises in Iran have had to rely largely on equity from family sources or internal cash generation.
IFC expects the demonstration effect of this project to lead to the development of a healthy and competitive leasing sector in the country and indirectly result in a broader progress in development.
IFC is the private sector arm of the World Bank Group. Its mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. — (menareport.com)
© 2002 Mena Report (www.menareport.com)