IDFC Presentation. May May 21, Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited.

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1 IDFC Presentation Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited. May 21,

2 Indian Infrastructure Brief History, Shareholding & Board Strategy, Structure, Core Team and Businesses Performance Conclusion 2

3 Huge Investments Over the Past Decade.but, Still a HUGE Deficit! ~US$436bn invested in infrastructure since 2003 Driving acceleration in GDP growth Infrastructure investment (US$ bn) % 8.0% 6.0% Real GDP growth % 0 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 2.0% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E Power: 16% shortfall at peak demand; per capita usage at 10% of global average Ports: Major ports operating at 95% capacity, with demand growing at 10% Roads: National and state highways are stretched beyond maximum capacities average trucks coverage of 200km per day (25% of the global average). Railways: Both coverage and efficiency is lacking track length of 35km/1,000 sq km vs. global average of 125, average train speed 25km/hr vs. China s 150km/hr. Airports: Penetration is low (25% of Brazil s, 20% of China s, 2% of US ) efficiency beginning to improve Infra investments... Not a choice, but a NECESSITY! Source: IDFC Securities Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited. 3

4 Infrastructure Ambitious Plans & Aggressive Investments The 11th Five-Year Plan (FY08-12) envisages investments of US$500 bn* in infrastructure Initial projections for 12 th Five-Year Plan (FY13-17) at ~US$1trn Others Port capacity to almost double; non-metro airports to see major push Water Supply & Ports & Airports 6% 1% 100,000MW generation capacity addition Sanitation Power 12% 35% Irrigation 13% Total investments US$500 bn Railways Dedicated Freight Corridor 15% Roads 18% 40,000km of road development/expansion *Excluding telecom Source: IDFC Securities Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited. 4

5 Infrastructure Spend to Rise to ~8% of GDP GCF in Infrastructure (Rs bn - LHS) % of GDP (RHS) 8, Actual investments, although lagging plan targets, have still been aggressive and could have been higher but for the global financial crisis 6, , , % 0 FY07 FY08 FY09 FY10 FY11E FY12E FY13E FY14E FY15E 4.0 A secular uptrend in infrastructure investments IDFC Securities sees total infrastructure spend of ~US$700bn over FY11 15E Source: IDFC Securities Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited. 5

6 Infrastructure Increasing Private Sector Participation Public investments to dominate spend, but private investments to grow 3x! 8,000 Public Private 3,900 24% CAGR for private investments over FY ,550 3,110 6,000 2,084 1, , ,211 1,350 2,000 2,237 2,516 2,915 3,274 3,650 4,100 4,100 0 FY09 FY10E FY11E FY12E FY13E FY14E FY15E Source: IDFC Securities Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited. 6

7 Indian Infrastructure Brief History, Shareholding & Board Strategy, Structure, Core Team and Businesses Performance Conclusion 7

8 History ( ) IDFC was founded on the recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan IDFC, a Public Private Partnership, incorporated in Chennai. Government holds 40% of the company, 40% is held by foreign shareholders and the rest by domestic entities. IDFC commences business operations with a mission to lead private capital to commercially viable infrastructure projects IDFC successfully raises $200 million for the India Development Fund, the first infrastructure focused private equity fund. IDFC goes public through a successful public offering that is oversubscribed 38 times. Shares issued at Rs. 34 a share. Lists on the National and Bombay Stock Exchanges. Government shareholding reduces from 40% to 26% IDFC successfully raises $450 million for its second infrastructure focused private equity fund IDFC raises additional capital of USD 500 million through a Qualified Institutional Placement at Rs. 127 a share. Government shareholding reduces to 23%. Acquired controlling stake in SSKI IDFC successfully raises $930 million India Infrastructure Fund (IDFC Project Equity) IDFC successfully raises $700 million for its third infrastructure focused private equity fund. IDFC enters into asset management by acquiring the AMC business of Standard Chartered Bank in India. IDFC becomes part of Nifty 50 8

9 Shareholding Pattern & Board of Directors MF 5.5% Shareholding Pattern (March 31, 2010) Corporate Bodies 3.0% Retail 9.6% GoI 20.2% Deepak Parekh, Non-executive Chairman, HDFC G. C. Chaturvedi, Additional Secretary, Department of Financial Services, Ministry of Finance S. S. Kohli Abdul Rahim Abu Bakar, Chairman, UEM Builders Berhad, Opus Group Berhad Khazanah Dimitris Tsitsiragos, Director Global Manufacturing & Services, International Finance Corporation S. H. Khan Non-executive Chairman Nominees of Ministry of Finance, Government of India Nominees of Domestic and Foreign Institutional Shareholders FIs / Insurance Co / Banks 16.4% FII / FDI 45.4% Shardul Shroff Gautam Kaji Independent Directors Omkar Goswami Donald Peck Rajiv B. Lall Managing Director & CEO Vikram Limaye Whole-time Director 9

10 Indian Infrastructure Brief History, Shareholding & Board Strategy, Structure, Core Team and Businesses Performance Conclusion 10

11 Strategy PPP Advisory Group Initiative Feedback IDFC Capital Project Equity Project Private Equity Project Finance Finance Project Equity Investment Banking Investment t Banking Proprietary Equity Project Equity Investment Banking Asset Management Agent Engineering Design Structuring Advice Financial Advisory Debt Equity Refinancing i Distribution ib ti Process Mgt. Principal Project preparation Bidding Construction o & Project Mgt. O&M Sale / Listing IDFC Projects IDFC Projects IDFC Projects Pre-development Development Asset Maintenance Exit IDFC is a one-stop-shop shop for all products and services across the infrastructure value chain 11

12 Business Structure SHARED SERVICES HR, IT, Finance & Accounts, Corporate Communications, Corporate Corporate & Investment Bank Public Markets Asset Management Alternative Asset Management IDFC Foundation Balance Sheet : Rs 33,500 crore Project Finance, Treasury, Principal Investments, Investment Banking & Institutional Broking Debt, Equity and Fee Based Services AUMs : Rs 26,500 crore Debt to Equity : 80:20 Brand, Reach and Products AUMs : Rs 10,000 crore Private Equity, Project Equity and Fund-of-Funds Capacity building, CSR and Policy THE NUMBER OF EMPLOYEES AT IDFC GROUP IS 575 : the largest pool of human talent focused on infrastructure in the country / region 12

13 Core Team Shared Services Corporate & Investment Bank Rajiv Lall Vikram Limaye L.K. Narayan Sadashiv Rao Animesh Kumar Rajeev Uberoi Vinayak Mavinkurve Sanjay Grewal Tapasije Mishra Naishadh Paleja Managing Director and Chief Executive Officer Executive Director, member of the Board of Directors Group Chief Financial Officer Group Chief Risk Officer Group Head Human Resources, Corporate Communication Group Head Legal and Compliance Group Head Project Finance Group Head Project Finance Group CEO, Investment Banking CEO Broking Public Mkt AMC Naval Bir Kumar CEO of IDFC AMC Luis Miranda President and CEO of IDFC Private Equity Alternative Asset Management M. K. Sinha President & CEO of IDFC Project Equity Veronica John President & CEO IDFC Capital, Singapore IDFC Foundation Pradeep Singh Cherian Thomas Ritu Anand VC & MD IDFC Projects Group Head of PPP Initiatives Principal Advisor, Chief Economist 13

14 IDFC and the IFC context What are IFCs*? *Infrastructure Financing Companies NBFCs with a minimum of 75% of assets deployed in infrastructure Net owned funds of Rs3bn or more A minimum credit rating 'A'; and With a CRAR of 15 % and a minimum m Tier I capital of 10 % Norms Easier exposure norms Exposure limit on-lending to infra projects up by 500bp to 25% of owned funds for single borrower and to 40% for a single group of borrowers SCBs permitted exposure of 15% to a single borrower and 25% to a single group of borrowers Improving access to bank funds & ECBs Banks cap on lending to infra finance companies raised from 15% of capital funds (Tier 1+2) to 20% Risk weights of banks exposure to IFCs linked to credit rating assigned to such NBFCs Possibility to raise tax free infrastructure bonds IDFC could be one of the few primary players in the space 14

15 Project Finance Corporate and Investment Bank One of the largest Infrastructure focused financial institutions Dominant Infrastructure Financier Funded: Power plants of over 14,000 MW, including more than 600 MW renewable assets Road network of 1,200 km out of 7,600 km bid out by NHAI; 900 km of State roads Presence across the value chain in Power sector Pioneers in financing telecom tower business, assisted all major telecom operators Infrastructure advisory to: Domain Knowledge State Governments in unbundling of state utilities NHAI on model concession agreements for the road sector Various State Governments and Municipalities in urban planning Corporate advisory: Hand-hold advisory for PPP infrastructure projects (generation, transmission etc) Awards IDFC was ranked #7 in the global project finance league table published by Thomson Reuters for the period ending March 31st

16 Corporate and Investment Bank Project Finance : Exposure & Outstanding Disbursements Sectors Exposure Outstanding Disbursements Sector March 31, 2009 March 31, 2010 March 31, 2009 March 31, 2010 Sector Rs crore % Rs crore % Rs crore % Rs crore % Energy 12,499 41% 16,800 38% Energy 8,217 36% 10,342 37% Transportation 7,307 24% 8,676 20% Transportation 5,793 25% 5,548 20% Telecom 3,344 11% 10,705 24% Telecom 3,252 14% 5,725 21% Industrial & Commercial 3,390 11% 3,573 8% Industrial & Commercial 2,977 13% 3,280 12% Tourism 1,672 5% 958 2% Tourism 1,217 5% 764 3% Other misc 2,552 8% 3,129 7% Other misc 1,653 7% 2,227 8% Total 30,764 43,842 Total 23,109 27,885 Growth (Y-o-Y) Y) 43% Growth (Y-o-Y) Y) 21% 35,000 30,000 Gross Approval Gross Disbursement 25,000 20,364 20,000 30,442 15,000 10,000 5,000 6,411 3,719 10,632 6,045 13,203 7,357 12,006 10,317 8,085 12,962 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY

17 Corporate and Investment Bank IDFC Capital & IDFC Securities Research IDFC-Securities among India s leading domestic stock broking houses Strong and independent Research Analysts rated across sectors Known for contrarian calls Wide coverage of around 200 companies across 22 sectors Team with extensive industry experience Research franchise across sectors like infrastructure, banking and consumer goods Consistently ranked as one of the best domestic wholesale brokerages Starmine Best Broker for India Mid and Small Caps (2008) Institutional Broking Global reach with clients across geographies Pronounced Best Local Brokerage for the last 20 years by Asiamoney in its Poll of Polls 2004, Poll of Polls 2009 Investment Banking Among India s largest infrastructure-focused investment bank (M&A, debt syndication, capital market offerings, private equity) Successful track record of international fund raising Product expertise and franchise with investors complemented by IDFC s balance sheet, corporate & government relationships and domain knowledge 17

18 Corporate and Investment Bank Punj Lloyd Ltd Shapoorji IPallonji 18

19 Principal Investing Corporate and Investment Bank Comprises Venture Capital Funds : Investments in our funds and other funds Project Finance : Unlisted equity investments in infrastructure Proprietary Investments : Listed equity investments in infrastructure Financial : Include investments like NSE, ARCIL and STCI Treasury : Debt investments Strategy is to consistently support IDFC sponsored funds and to make co-investments alongside funds 19

20 Public Markets Asset Management IDFC AMC Acquired in 2008 from Standard Chartered The only fund house to be voted twice as the Best Debt Fund Manager by Business Standard AUM of USD 5.6 billion (debt equity mix of 82:18) and is currently ranked 10 amongst 37 Indian AMCs. IDFC MF has been rated as the Best Performing Track record of 8 years Fund House by the ET Quarterly MF Tracker for Q1 & Q2 of FY No. of employees : 147, direct reach to 38 cities with an indirect presence in over 140 towns Business World & Business Standard voted Kenneth Business to include mutual funds, offshore Andrade (Head Investments) as the Smartest Fund fund management / advisory, PMS and other Manager of the Year for the year 2009 hybrid alternative products 20

21 Private Equity Alternative Asset Management Established in 2002 as a wholly owned subsidiary of IDFC Manages a corpus of USD 1.3 billion and is India s largest and most active private equity fund focussed on infrastructure The three funds under management are India Development Fund (USD 190 million), IDFC Private Equity Fund II (USD 440 million) and IDFC Private Equity Fund III (USD 700 million) IDFC PE has made 30 investments across 26 companies and has had 6 exits Major Investments include GMR Infrastructure, Gujarat State Petronet, Delhi International Airport, L&T Infrastructure Development, Manipal Universal Learning, Quippo Infrastructure, PV Technologies and Goodearth Maritime. Won an award by the Infrastructure Investor, for the Asia Infrastructure Fund Manager of the year and the Asian Infrastructure Deal of the Year Project Equity Set-up in 2007 as a wholly owned subsidiary of IDFC Manages the India Infrastructure Fund of US$ 927 million Invests primarily for the long term in infrastructure equity opportunities in assets/projects in India Portfolio is expected to comprise operational, brownfield and greenfield assets/projects in core infrastructure sectors including transport, energy and utilities, telecommunications infrastructure and social infrastructure 21

22 Alternative Asset Management IDFC Global Alternatives Established in 2008 in Singapore to develop a fund of funds business First fund will be a global emerging markets private equity fund-of-funds Will focus mainly on Asia and the Commonwealth of Independent States (CIS) Will focus its manager selection on those that provide expansion and buyout capital to middle market companies IDFC Projects Established in 2008 to intermediate risk capital and capture potential upside from investing in early stage infrastructure development To focus on leveraging third party funds Focus on power and roads Disciplined and calibrated approach one project at a time 22

23 IDFC Foundation Policy Advocacy and Advisory Across sectors over the years India Infrastructure Report thematic PPP Initiatives Government Advisory Services Joint Ventures ideck, U-DeC and DIMTS Project Development Fund Triple I Capacity Building I-Cap Corporate Social Responsibility Responsible business practices and inclusive development 23

24 Indian Infrastructure Brief History of IDFC Structure, Shareholding and Board Strategy, Core Team and Businesses Performance Conclusion 24

25 Financials (% of avg total assets) Particulars FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Net Interest Income 3.7% 3.0% 2.8% 2.9% 3.1% 3.6% Infrastructure 3.7% 2.9% 2.6% 2.4% 2.6% 3.3% Treasury 0.0% 0.1% 0.2% 0.5% 0.6% 0.3% Non-Interest Income 2.4% 2.2% 1.7% 2.6% 2.1% 3.0% Principal Investment 1.7% 1.3% 0.9% 0.9% 0.6% 1.1% Asset management 0.1% 0.3% 0.3% 0.2% 0.7% 0.9% Investment Banking 0.0% 0.0% 0.0% 0.8% 0.4% 0.6% Loan related & other fees 0.6% 0.7% 0.5% 0.7% 0.4% 0.5% Other Income 01% 0.1% 00% 0.0% 01% 0.1% 01% 0.1% 01% 0.1% 01% 0.1% OPERATING INCOME 6.2% 5.2% 4.7% 5.6% 5.2% 6.7% OPERATING EXPENSES 0.5% 0.5% 0.5% 1.1% 1.2% 1.8% PRE-PROVISIONING PROFITS 5.7% 4.7% 4.1% 4.5% 4.0% 5.0% Provisions 0.9% 0.4% 0.1% 0.3% 0.5% 0.4% PBT 4.8% 4.3% 4.0% 4.2% 3.5% 4.6% Less : Provision for Tax, Profit in associate co, Minority interest, etc 0.3% 0.5% 0.7% 1.1% 1.0% 1.2% PAT 4.5% 3.8% 3.3% 3.1% 2.5% 3.4% Particulars FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Overall Spread 24% 2.4% 18% 1.8% 19% 1.9% 21% 2.1% 24% 2.4% 28% 2.8% Cost to Income # 8.1% 10.2% 11.5% 19.2% 23.6% 26.0% Effective Tax Rate 6.4% 11.7% 20.1% 26.3% 27.7% 25.7% Loan Loss Reserve Ratio 0.0% 2.3% 1.6% 1.1% 1.8% 1.8% Leverage (Closing) 3.8 x 4.7 x 6.2 x 5.0 x 4.8 x 4.8 x RoE 17.2% 17.0% 17.7% 15.6% 12.5% 15.9% # Cost to Income : Operating Cost / Operating Income 25

26 Robust Balance Sheet Business Outstanding Disbursements Total Exposure Rs. million 300, , , , , US$ 2.4bn Rs 113,560 mn US$ 1.7bn Rs 80,060 mn US$ 3.3bn Rs 157,810 mn US$ 5.0bn US$ 4.9bn Rs 233,920 mn Rs 231,090 mn US$ 5.9bn Rs 278,850 mn Rs. R million 500, , , ,000 US$4.8bn Rs 224,110 mn US$ 3.7bn Rs 174,930 mn US$2.6bn Rs 124,137 mn US$6.7.2bn Rs 340,005 mn US$6.5bn Rs 307,640 mn US$9.3bn Rs 438, mn 50, ,000 0 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 0 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Outstanding Disbursements (Mar 31, 2010) Total Exposure (Mar 31, 2010) Commercial, Ind ustrial & Tourism 11.8% Tourism 2.7% Others 8.0% Energy 37.1% Commercial, Ind ustrial & Tourism 8.2% Tourism 2.2% Others 7.1% Energy 38.3% Telecom 20.5% 1 USD = Rs Transportation 19.9% Telecom 24.4% Transportation 19.8% 26

27 Strong Operating Track Record Leverage & RoE Net profit (USD MM) 20.0% 16.0% 12.0% 8.0% 40% 4.0% 17.2% 17.0% 3.8x 4.7x 17.7% 6.2x 7.0x 15.6% 15.9% 6.0x 12.5% 5.0x 5.0x 4.8x 4.8x 4.0x 3.0x 2.0x 1.0x US$ mn % Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar x 0 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Forex Loans 8% Sub debt 3% Rupee Loans 15% Borrowing profile (Mar 31, 2010) Short Term 15% Bonds / Debentures 59% US$ mn Operating income break-up Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Duration (Mar 31, 2010) : Assets 1.95 years, Liabilities 1.75 years NII Principal Investment Asset Management 27

28 Indian Infrastructure Brief History of IDFC Structure, Shareholding and Board Strategy, Core Team and Businesses Performance Conclusion 28

29 Uniquely Positioned Company Unique platform combining benefits of Government sponsorship, internationally diversified shareholder base and professional management to pursue business opportunities in the infrastructure space Well poised to capitalize on the strong momentum in infrastructure investments High profile Board and experienced management team with 575 professionals Deep domain knowledge in the core infrastructure sectors of energy, transportation, telecom & industrial and commercial infrastructure Focus on high ROE businesses including Asset Management, Investment Banking and Principal Investments Strong track record of performance, consistent growth and execution of strategy Total Assets March 31, 2010 US$ 7.1 bn with 5 year CAGR of 29% Net Operating Income FY2010 US$ 447 mn with CAGR ( ) of 37% PAT FY2010 US$ 225 mn with CAGR ( ) of 28% Gross NPA : 0.4%, Net NPAs : 0.2% AUM March 31, 2010 US$ 8.1 bn with 5 year CAGR of 112% 29

30 Thank You Corporate & Investment Bank Project Finance Investment Banking Institutional tional Broking Principal Investment Treasury Equity Public Markets Asset Management Mutual Fund Alternative Asset Management Private Equity Project Equity Global Alternatives Projects Foundation IDFC 2 nd -6 th Floor, Naman Chambers, C32, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai Tel: Delhi IDFC The Capital Court, 2nd Floor, Olof Palme Marg, Munirka, New Delhi Tel: Website: May 21, 2010 Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited