It is "very likely” that Coface will expand its stake in SBCE, the Brazilian credit insurer, from 27% to 75% on April 10, 2008, according to Fernando Blanco, president in Brazil for Coface. The remaining 25% will remain with shareholders Banco do Brasil and BNDES.
Privately-held SBCE is valued at more than R20mn (US$11.6mn), according to a market analyst.
SBCE's medium and long-term department, which analyses export transactions guaranteed by the Brazilian government, will report directly to the board members. This will prevent Coface from obtaining privileged information when French and Brazilian exporters compete for international sales, explains Blanco in So Paulo.
Moreover, Coface is betting on domestic credit insurance to boost its presence in Brazil. Coface's credit insurance policies cost between 0.08% and 0.40% of the customers' sales, he says. Prices have fallen 17% since last year on increased competition, he comments.
Credit insurance policies make companies less dependent on banks and more on suppliers for working capital, driving down bank spreads, Blanco says.
Coface had R30mn in revenues in Brazil in 2007, while SBCE had R14.5mn, according to Blanco. Revenue will increase 25% this year, Blanco predicts.
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