IFC Invests $130M in Magalu to Drive Digital Growth, Sustainability in Brazil

The investment package consists of a $100 million loan directly from IFC’s own account, with an additional $30 million mobilized from other investors.

 

The International Finance Corporation (IFC), a member of the World Bank Group, has announced a landmark $130 million investment in Magazine Luiza S.A. (Magalu), one of Brazil’s leading multi-channel retailers. This strategic partnership aims to accelerate Magalu’s technological advancement, strengthen its marketplace operations, boost environmental sustainability efforts, and empower micro, small, and medium-sized enterprises (MSMEs), while promoting gender diversity in Brazil’s retail technology sector.

Structuring the Investment for Greater Impact

The investment package consists of a $100 million loan directly from IFC’s own account, with an additional $30 million mobilized from other investors. Unique in its design, the financing is structured as an incentive-based loan, tightly linked to environmental goals — specifically, the expansion of Magalu’s e-waste collection and recycling operations.

Magalu has committed to scaling its e-waste initiatives by more than fivefold over the next five years. By enhancing recycling efforts, the company aims to significantly reduce the environmental impact of Brazil’s growing electronic consumer market. This move will not only strengthen Magalu’s sustainability credentials but will also set a new benchmark for environmental responsibility in Latin America’s retail sector.

Empowering MSMEs and Advancing Digital Transformation

Brazil’s formal retail sector, which includes hypermarkets, supermarkets, and mini markets, accounts for about 50 percent of the national retail market — a figure much lower than in developed economies. This presents an opportunity to improve the affordability and accessibility of essential goods for underserved populations.

Magalu’s expansion of its digital infrastructure and marketplace platform will offer MSMEs — which constitute 90 percent of businesses in Brazil — greater access to broader markets. Despite their prominence, MSMEs contribute only 50 percent to formal employment and 30 percent to GDP, highlighting a vast untapped economic potential. By integrating more MSMEs into its platform, Magalu will help small businesses scale up, formalize operations, and access critical financial services.

Additionally, this investment aligns with broader efforts to boost quality employment. By promoting greater inclusion of women in Magalu’s technology divisions, the partnership seeks to create pathways for a more diverse and equitable workforce in Brazil’s rapidly expanding digital economy.

Strengthening Environmental and Social Management

Beyond financing, IFC will work closely with Magalu to enhance its environmental and social (E&S) management systems. This will involve aligning Magalu’s practices with international sustainability standards and developing comprehensive frameworks that address climate impact, resource management, labor rights, and gender inclusion.

This approach reflects IFC’s broader strategy to embed sustainability into the core operations of its clients, ensuring that economic growth goes hand-in-hand with social equity and environmental stewardship.

Leadership Voices: A Commitment to Sustainable Progress

Frederico Trajano, CEO of Magazine Luiza, emphasized the significance of this partnership, stating,

"The celebration of this investment strengthens our capital structure and represents an important endorsement from IFC for our social and environmental policies. This is a powerful indication that we are moving in the right direction."

Meanwhile, Manuel Reyes Retana, IFC Regional Director for South America, highlighted the broader implications of the collaboration:

"Our investment in Magalu underscores IFC’s commitment to supporting digital transformation and sustainable development in Brazil. By enhancing Magalu’s technology infrastructure, we aim to drive inclusive growth and environmental sustainability, and promote the generation of more qualified jobs in the Brazilian retail sector."

Alignment with Brazil’s Development Priorities

The partnership supports the World Bank Group’s Country Partnership Framework (CPF) for Brazil for the 2024–2028 period, which focuses on building a more productive, inclusive, and greener economy. By prioritizing innovation, environmental responsibility, and the empowerment of small businesses and women, IFC and Magalu are contributing directly to Brazil’s long-term sustainable development goals.

IFC’s $130 million investment in Magalu stands as a beacon of how strategic financial partnerships can fuel digital innovation, environmental leadership, and inclusive economic growth. As Brazil continues its journey toward a more sustainable and equitable economy, initiatives like this will play a critical role in ensuring that no one is left behind.