IFC Agribusiness Department Dr. R. John Hatton Senior Industry Specialist, IFC Agribusiness Department OIE Conference, Cairo October 2008
IFC Work to Support Implementation of Animal Welfare Standards IFC - An Overview IFC in the Agribusiness Sector IFC Livestock Investment Approach including Animal Welfare Standards Discussion OIE Conference- October 2008 2
IFC An Overview
IFC is a Member of the World Bank Group IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation MIGA Multilateral Investment and Guarantee Agency Est. 1945 Est. 1960 Est. 1956 Est. 1988 Role: To promote institutional, legal and regulatory reform To promote institutional, legal and regulatory reform To promote private sector development To reduce political investment risk Clients: Governments of member countries with per capita income between $1,025 and $6,055. Governments of poorest countries with per capita income of less than $1,025 Private companies in member countries Foreign investors in member countries Products: - Technical assistance - Loans - Policy Advice - Technical assistance - Interest Free Loans - Policy Advice - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services - Political Risk Insurance Shared Mission: To Promote Economic Development and Reduce Poverty OIE Conference- October 2008 4
IFC s Global Reach 100+ country and regional advisory services offices worldwide Moscow Washington Cairo Istanbul New Delhi Hong Kong Rio de Janeiro Johannesburg IFC Hubs IFC Offices Drawing on our experience and lessons-learned, we share sector best practices to the benefit of our clients. OIE Conference- October 2008 5
IFC s Products and Services Senior Debt Structured Finance Mezzanine Finance Private Equity On-lending Liquidity management Acquisition financing Warehousing facilities Syndicated loans Partial credit guarantees Securitization Bond underwriting Credit Enhancement Convertible debt Subordinated debt Other Tier II instruments Common shares Preferred shares Global Trade Finance Program $1 billion program Guarantees to issuing banks 46 issuing banks in 24 countries 92 confirming banks in 62 countries $579 million of issued guarantees in first 12 months Advisory Services Corporate governance Risk management Small and medium business banking Housing finance Energy efficiency finance Sustainable Finance Carbon finance Renewable energy Supply chain financing Corporate governance OIE Conference- October 2008 6
IFC in the Agribusiness Sector
IFC Value Add in Agribusiness Long-term Competitive Financing Regional Knowledge Global Sector Expertise Country Risk Mitigation Environmental & Social Risk Management Sustainability Toolkit Equity Fixed/Floating Rates, Local Currencies Up to 15 year Loan Maturity Flexible Amortization Profile Catalyst for other Investors and Lenders Equity Participation Capital Mobilization Extensive Local Office Network Local Transaction Experience Strong bank partnerships through client networks and B loan participants World Bank Synergies Joint Venture partnership management 40+ Years of Sector Expertise Industry Specialist Advice and Benchmarks Greenfield Expansion/ Modernization Corporate Strategy Access to International Investors Government Relations Neutral broker Role Reduced Risk of Expropriation, Breach of Contract, Convertibility World Bank Synergies Witholding Tax Benefit Advice on Environmental and Social Best Practices Energy and Water Use Management / Cleaner Technologies Equator Principles Modeled after IFC Standards Local Consultation and Disclosure Local Supplier Development Environmental/ Social Advice Corporate Governance Local Economic Development HIV/AIDS Prevention Community Development Funding OIE Conference- October 2008 8
Recent experience in livestock sectors Poultry Pigs/Pork Combination Livestock Cattle $175 million $61 million $160 million $90 million Suguna (India) Contract local suppliers with branded live bird sales kiosks Wadi (Egypt) Breeding operations Mironovsky (Ukraine) Broiler production, chilled distribution and retail operations Halim (Korea) Largest fully integrated broiler producer in Korea Stavropolskyi Broiler (Russia) Integrated production S. Europe Establish PS farms, feedmill, contract growing Agrokor (Croatia) Rehabilitated pig and cattle farms postprivatization to ensure quality local meat supply Zhengye-ADC (China) Introduce PS and GP stock of PIC pigs and develop local supply chain of breeders BGK (Russia) Double pig and poultry production, including expansion of feed mill operations Banvit (Turkey) Double broiler raising operation; integrate beef raising Pronaca (Ecuador) Pig slaughtering operation integration with broiler raising Sadia & Perdigão (Brazil) Repeat debt & equity investments Bertin (Brazil) Introduce sustainability and traceability best practices to Brazil s leading beef and leather exporter OIE Conference- October 2008 9
Agribusiness Committed Portfolio $2.2 Billion Committed Portfolio As Of June 30, 2008 By Sector By Region Other Food 14.2% Sugar 15.8% Veg Fats & Oils 13.1% Other 8.6% Animal Processing 20.4% Beverages 10.2% Grains & Milling 7.4% Dairy Products Fruits & 4.3% Vegetables 6.1% Cent. & East. Europe 15.6% South As ia 6.5% Cent. America 6.7% S.Europe/ Cent. Asia 9.6% Africa 5.9% East Asia 16.4% Mid. East/ N. Africa 1.9% South Am erica 37.7% OIE Conference- October 2008 10
Global Expertise: Sample of clients Turkey Ukraine Ecuador Russia Nicaragua Egypt China Peru India Ghana Indonesia Uruguay Argentina Brazil Mozambique South Africa In Portfolio In Pipeline Past Client Clients benefit from access to global expertise and IFC network of clients OIE Conference- October 2008 11
IFC Livestock Investment Approach including Animal Welfare Standards
IFC s Project Cycle Monitoring Pre-Appraisal (Early Review) Appraisal (Due Diligence) Disclosure and Decision Making Approval and Disbursement Supervision (Monitoring) Client needs determined Assessment of project s impacts and development contributions Policy Committee approval Mandate letter Assessment of business opportunities and risks Analysis of environmental and social opportunities and risks Appraisal Credit Committee approval Disclosure of environmental and social information Opportunity for public comment Negotiation and agreement of principal terms Board approval Signing of legal documents Disbursement Annual review of project performance Financial Environment & Social Report Ongoing reviews including possible site visits and technical guidance We Agree on a Specific Timeline to Meet Client s Needs OIE Conference- October 2008 13
Pre-Appraisal: RSPCA s 5 Freedoms Freedom From hunger or thirst From discomfort From pain, injury or disease To express normal behavior From fear and distress OIE Conference- October 2008 14
VEGAN System for Appraisal V - E - G - A - N - Valuation Environment Genetics Animal Health Nutrition OIE Conference- October 2008 15
MEGAN System for Appraisal M - Management OIE Conference- October 2008 16
MEGAN System for Appraisal M - E - Management Environment OIE Conference- October 2008 17
MEGAN System for Appraisal M - E - G - Management Environment Genetics OIE Conference- October 2008 18
MEGAN System for Appraisal M - E - G - A - Management Environment Genetics Animal Health OIE Conference- October 2008 19
MEGAN System for Appraisal M - E - G - A - N - Management Environment Genetics Animal Health Nutrition OIE Conference- October 2008 20
Discussion OIE Conference- October 2008 21
Thank You Dr. R. John Hatton Senior Industry Specialist, IFC Agribusiness Department rhatton@ifc.org OIE Conference- October 2008 22