IFC eyes $110-M investment in PH fintech First Circle
The International Finance Corp. (IFC) said it plans to invest up to $110 million in Philippine fintech firm First Circle to expand credit access for underserved micro, small and medium enterprises (MSMEs) in the country.
In a disclosure dated May 8, the private-sector arm of the World Bank Group said the financing would take the form of a four-year securitization facility through a special-purpose vehicle that would pool a “diversified, collateralized” portfolio of SME loans originated by First Circle.
The deal has a rollover option available at the end of each of the first three years.
This investment would mark IFC’s first securitization in the Philippines’ market, contributing to the deepening and development of domestic capital and funding products.
Securitization is the process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities.
The $110-million package will include an IFC A loan of up to $20 million in the senior tranche, an IFC C loan of up to $10 million in the mezzanine tranche, and the mobilization of up to $80 million to expand MSME lending in the country.
Commitments are expected to be executed in multiple tranches, with IFC’s participation in the first tranche of up to $15 million across both senior and mezzanine tranches.
“The most significant expected project-level outcome is increased access to finance for SMEs, including key economic sectors like agriculture, healthcare, tourism, construction, and value-added manufacturing that will help create jobs in the Philippines,” the disclosure read.
“IFC’s investment will enable a pioneering securitization structure backed by SME receivables to provide longer term, tailored capital for productive uses such as working capital, inventory, and growth investments,” it added.
Banks are typically hesitant to lend to MSMEs due to factors like lack of acceptable collateral, unstable income or cash flows and lack of credit track record.
This forced many MSMEs to borrow funds with high interest rates from informal sources like loan sharks.
Latest data from the Bangko Sentral ng Pilipinas showed total bank loans to MSMEs had reached P574.8 billion as of end-2025. This increased 5 percent from a year earlier.
However, that amount only accounted for 4.73 percent of the Philippine banking industry’s P12.1-trillion lending portfolio. This was way below the prescribed ratio of 10 percent.
