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Summary of Project Information (SPI)

This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
Project number22673
Project nameHipotecaria Nacional, S.A. de C.V.
CountryMexico
SectorPrimary Mortgage Institutions
Department
Company nameHipNal
Environmental categoryC
Date SPI disclosedApril 14, 2004
Projected board dateMay 27, 2004
StatusCompleted
Previous EventsInvested: August 31, 2004
Signed: June 25, 2004
Approved: May 27, 2004

Description of company and purpose of project
Hipotecaria Nacional (HipNal or the company) is Mexico’s largest housing sofol (specialized mortgage lending institution). Based in Mexico City, HipNal started operations in 1994. Its main activity consists of originating and servicing residential mortgages financed by Sociedad Hipotecaria Nacional (SHF), a federal mortgage lending institution and the primary source of funds for sofols, to low-income individuals. As of December 31, 2003. HipNal’s total assets amounted to MXN 27 billion ($2.4 billion), while net worth amounted to MXN 1.6 billion ($150 million). It is the leader in market share based on total assets among mortgage sofols, holding almost 30% of the market. Its portfolio is divided as approximately two-thirds in mortgage loans and the balance in construction loans to residential real estate developers. It has a network of 77 branches around the country and services approximately 82,000 mortgage loans with aggregate amount outstanding of MXN $17.5 billion ($1.6 billion).

HipNal has grown at a rapid pace since its inception a decade ago, given the high demand for low-income housing in Mexico. To enable it to continue to grow in step with the market and to diversify its funding source from the SHF, its strategy is to issue MBS, thus freeing up its balance sheet of assets so securitized. The purpose of IFC’s loan is to assist the company to put in place a viable structure to facilitate the planned MBS issue. IFC’s loan will be collateralized by a pool of mortgages that will satisfy IFC-stated criteria, and will be transferred to an independent Trust, in order to facilitate the planned securitization.

Project sponsor and major shareholders of project company
The project sponsor is Hipotecaria Nacional. HipNal is owned by 12 individuals, with the largest three shareholders holding 73% of HipNal’s shareholding. Some of the shareholders are also part of the key management group. The shareholders are members of the local community with diversified business interests, and have long years of experience in the financial sector.

Total project cost and proposed IFC investment
The proposed IFC investment is a Mexican peso-denominated revolving line of credit, for IFC’s own account, of $75 million equivalent, secured by a pool of mortgages that will satisfy IFC-specified criteria. The mortgages will be held by a trust separate from the borrower.

Location of project and description of site
The location of the project is at the headquarters of Hipotecaria Nacional in Mexico City, Mexico.

Project Development Impact and IFC's Role
The project is expected to have a high development impact in the following areas:

- Extension of housing finance to a large number of previously underserved groups:

As a sofol, HipNal’s principal business focus is on the low-income and social housing segment in Mexico. By providing increased sources of residential financing to this and the middle-income segment of the domestic population, the project will help to address the country’s current housing deficit and make the purchase of homes more affordable, particularly to a larger number of poor consumers.

- Capital market development:

The project will assist HipNal in facilitating the implementation of its mortgage securitization program, and thus assist in and support the development of a new risk asset class in the domestic capital market that fits well with the investment needs and objectives of institutional investors in Mexico.

- Diversifying funding source:

As the SHF is shifting from its original role of supporting sofols through funding to providing guarantees, it is imperative for sofols to identify and employ alternative sources of financing. IFC is serving a highly critical role during this funding transition in the sofol sector.

Environmental and social issues - Category C
This is a category C project according to IFC's environmental and social review procedure. The nature of HipNal's portfolio (low- to middle-income residential mortgage loans) means that there will be minimal environmental impacts associated this investment. Therefore, no further environmental or social analysis is required.

To contact the project company, please write to:
Mr. Eduardo Gastelu Martinez, CFO
Hipotecaria Nacional, S.A. de C.V.
Liverpool # 88, Col. Juárez;
MÉXICO; D.F.; C.P. 06600

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