Malta-based Fimbank along with the IFC and Bicbanco have launched joint venture company Brasilfactors to offer domestic and cross-border factoring services to Brazilian corporates and small and medium enterprises (SMEs).

Fimbank and Bicbanco have each acquired a 40% stake in the new company while the IFC acquired the remaining 20%. The joint venture is launched with an initial equity investment of US$10mn, which may increase to US$25mn as the business develops, Fimbank says.

Although the Brazilian economy is one of the fastest growing in the world, SMEs in this country have limited access to funding and sophisticated trade solutions. According to Fimbank, Brasilfactors aims to help fill this gap with short-term funding against receivables and management solutions, such as risk protection and collection services.

IFC’s senior investment officer Francisco Lozano explains to GTR that the factoring service aims to primarily target companies that generate between US$3mn to US$30mn of annual sales, and who have the potential to grow into larger companies.

“Overall however, we’re looking to target a large range of industries as we feel that factoring can play an important role in helping these SMEs gain access to trade and working capital funding and transfer foreign buyer’s counterparty risks. The service also aims to provide SMEs with networking options, as we hope to introduce them to buyers, and in turn help them generate business.”

He adds: “We believe that the factoring service will help Brazil’s onshore business mostly, as we have a lot of small local businesses who are currently looking to take advantage of the economic expansion.”