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Sabo Industria e Comercio de Autopecas Ltda
Summary of Proposed Investment
This Summary of Proposed Investment 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.
SABO INDUSTRIA E COMERCIO DE AUTOPECAS LTDA
Motor Vehicle Parts
Date SPI disclosed
May 11, 2007
Projected board date
June 15, 2007
Invested: April 7, 2008
Signed: August 22, 2007
Approved: July 11, 2007
View Environmental & Social Review Summary (ESRS),
Sabˇ Industria e Comercio de Autopecas Ltda (Sabo or the company), a mid-sized family-owned Brazilian company based in San Paulo, produces sealing and connecting devices for automobiles, such as oil seals, gaskets, and hoses. Founded in 1942 in Brazil, it has manufacturing facilities and operations in six countries in Europe, North America, and South America, and has emerged as an important supplier in each of the markets in which it operates. The company has a corporate capital expenditure program for the next five years which includes debt refinancing, capacity upgrading and expansion, and R&D.
Project sponsor and major shareholders of project company
Sabo is 100% controlled by the Sabo family, through two holding companies, JCA, and Ronuro. Both JCA and Ronuro are evenly owned by three family holding companies, each owned by the founder’s descendants, respectively. The Sabo family is well reputed in the Brazilian business community.
Total project cost and amount and nature of IFC's investment
The proposed 5-year investment program will include capital expenditure for upgrading and expanding the company’s production capacity, and R&D. The proposed IFC investment is $40 million for IFC’s own account.
IFC investment as approved by Board
40 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
The corporate capital expenditure will be undertaken by the company’s various subsidiaries, which are located in the industrial areas with good access to transportations in six countries including Brazil, Germany, Hungary, Austria, Argentina, and USA.
Anticipated development impact of the project
The company’s capital expenditure program will support the expansion and debt restructuring of a reputed OEM and aftermarket supplier. It will help upgrade a mid-sized company in the country and support the company’s effort in strengthening its global presence. The program will assist the company’s effort in expansion in emerging markets, thus helping generate South-South investments. In addition, the expansion is expected to improve the competitiveness of the company as well as create returns for its financiers, new jobs for workers, additional taxes, and sales for its suppliers.
A preliminary list of development impacts that will be tracked annually during supervision includes the following:
- Financial indicators: The company’s net sales and ROIC;
- Economic indicators: Operating income, taxes, local purchases, number of employees and wages;
- Adoption of new technology and manufacturing best practices transfer; and
- Environmental and social performance.
IFC's expected development contribution
IFC’s roles in implementing the investment program include:
- Access to long-term financing:
Although access to term financing for larger Brazilian companies has improved in recent years, Sabo, like most mid-sized Brazilian companies, continues to face difficulties in sourcing appropriate financing due to the high cost of short term funding and limited availability of long-term financing locally. IFC will provide long-term funding at an appropriate cost, broadening the company’s sources of long-term financing for capital investment, strengthening export competitiveness and helping to reduce financial risk in a volatile environment.
- Improve corporate governance and environment and social standards:
The company expects to work IFC on this deal to continue to update its corporate governance and environment and social practices, based on the belief that, to remain competitive on a global basis and continue to partner up with major clients, the company should comply with the best practices already adopted by those partners. In this sense, the deal with IFC would convey a message to the market of the company’s continued effort in improving its corporate governance practices, which should translate into favorable visibility with customers, facilitating new supply contracts and partnerships abroad. As a family owned business, IFC’s support is expected to pave the way for a possible public listing in future. IFC’s assistance in financing and upgrading the company’s social and environment, and corporate governance practices will play a key role in the company’s further expansion in the international markets.
Environmental and social issues - Category B
This is a Category B project according to IFC's Environmental and Social Review Procedure. Environmental, social and health and safety issues associated with the Investment Program, which were reviewed during appraisal, include the following:
- emissions to air;
- water consumption and liquid effluent treatment and disposal;
- ambient noise;
- management of hazardous materials such as solvents;
- solid and hazardous waste management;
- workplace conditions; and
- environmental and occupational health and safety management practices.
For inquiries about the project, contact:
Mr. Braulio de Carvalho, Corporate Director
Rua Matteo Forte, 216 – Lapa
Sao Paulo – SP – Brazil
Telephone: (55 11) 2174 5885
Fax: (55 11) 2174 5101
Environmental documents are available at the address above.
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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