International Finance Corporation Olaf Schmidt Global Head - Tourism, Retail & Property Manufacturing, Agribusiness & Services Department Structured Finance Conference November 15, 2012
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 2
Over US$100 billion Invested in Emerging Markets since 1956 Shareholders 184 member countries S&P & Moody s Rating AAA/Aaa Total Assets* US$76 billion Portfolio* US$56 billion Committed in FY12* US$20.3 billion - Own Account - US$15.4 billion Take market risk with no sovereign guarantees Promoter of environmental, social, and corporate governance standards Focus on development impact What we look for from clients: Commitment to project (equity) Successful track record & long-term strategy Integrity - Mobilized - US$ 4.9 billion # of Active Projects 1,737 # of Countries 129 # of Equity Investments 800 * As of 6/30/2012 Largest global development institution focused exclusively on the private sector in developing countries FY12 Commitments by Region South Asia 8% Middle East & North Africa 14% Sub- Saharan Africa 18% East Asia & the Pacific 17% Europe & Central Asia 19% Latin America &the Caribbean 24% 3
IFC s Global Reach Global Knowledge and Local access: more than 100 offices worldwide in 84 countries, with over half of IFC s 3,700 staff based in emerging markets Owned by 184 member countries. Collaborate with the rest of the World Bank Group Staff with specializations in financial services, industry, environment, corporate governance, advisory services and more Moscow Almaty Washington Istanbul New Dehli Cairo Mexico City Hong Kong Santo Domingo Dakar Bogota Nairobi Johannesburg São Paulo Buenos Aires IFC HQ/Regional Hub IFC Hub Offices IFC Regional Operations Center IFC Country Offices World Bank Group Hub Office 4 Singapore
Leveraging Global Industry Knowledge for Clients Infrastructure & Natural Resources Power Renewables Transport Utilities Oil & Gas Mining Sub-national Finance 22% 14% Banking Sustainability and Climate Change Finance Private Equity/ Funds Housing Finance Financial Markets Insurance Microfinance SME Banking Trade Finance Securities Markets Manufacturing, Agriculture & Services Agribusiness Forestry Healthcare & Life Sciences Education Manufacturing Industries Energy Efficient Machinery Chemicals Tourism, Retail & Property 64% Infra & Natural Resources Financial Markets Manufacturing, Agri & Services 5
IFC s Products and Services Senior Debt Structured Finance Mezzanine Finance Private Equity On-lending Liquidity management Acquisition financing Warehousing facilities Syndicated loans Local currency financing Partial credit guarantees Securitization Bond underwriting Convertible debt Subordinated debt Other Tier II instruments Common shares Preferred shares Syndication via IFC Asset Management Company Trade Finance Global trade supplier finance (GTSF) Distribution finance Global trade finance program (GTFP) Global trade liquidity program (GTLP) Critical commodity finance program (CCFP) Advisory Services Sustainable Business Advisory, including: Food safety Hospitality training Corporate governance Access to finance, including housing finance Investment Climate Public-Private Partnerships Sustainable Finance Carbon finance Renewable energy Green building & energyefficiency finance Supply chain financing Corporate governance financing 6
How IFC Differs from Other Partners Global Industry Expertise Long-term Competitive Financing Global investment team dedicated to industry sectors in emerging markets Industry specialists on staff Green Building and energy efficient expertise and advisory services One-stop-shop for financing: equity, debt, structured finance, etc., based on client needs Longer investment horizon and less cyclical than most financial investors: up to 10-12 years, both equity and debt Capital Mobilization IFC can mobilize funding: debt from commercial banks and other DFIs (syndications), equity from investors (AMC), etc. Country Risk Mitigation Reduced Political risk through government relations, preferred creditor status, neutral broker role Withholding tax benefit Regional Knowledge Environmental & Social Risk Management Global and local presence in more than 80 countries with increase focus on local presence and expertise Investment professionals in regional hubs and large country offices Advice on Environmental and Social Best Practices Equator Principles modeled after IFC Standards (60 international banks) Local Consultation and Disclosure Corporate Governance and Sustainability Toolkit 7
IFC Has Established Several Innovative Special Initiatives Active Crisis Response Initiatives Global Trade Liquidity Program - $5 bn from IFC and partners Global Trade Finance Program - $3 bn from participant banks in over 82 countries IFC aims to support $50 bn of trade over 3 years IFC Capitalization Fund - $3 bn from JBIC & IFC Microfinance Enhancement Facility - $0.5 bn from EIB, FMO, SIDA, and others Infrastructure Crisis Facility - $4 bn from KfW, DEG, Proparco, EIB Debt & Asset Recovery Program Target $4 bn to invest in NPL pools Initiatives Under Development Global Agriculture and Food Security Program (GAFSP) target of $1 bn for SMEs, smallholders to improve productivity, and access to finance Education for Employment as part of Arab World Initiative Export Credit Agency Initiative ECAs & emerging market importer linkages SME Initiatives to double IFC s SME reach in 4 years Linked Initiatives Health For Africa to expand affordable health care services in Africa, via research, technical assistance and Access to Finance (new $100 m fund, $100 m risk sharing facilities, etc.) AMC s ALAC Fund Sovereign, pension funds to co-invest $1 bn with IFC in ALAC region Water reach 100 mn people through projects to improve water access, quality & reduce waste 8
Business Opportunity at the Middle and Base of Pyramid Individual annual income (US$) 0.5 billion Mature markets: > $20,000 2 billion Emerging markets: $3,000 to $20,000 (Size: $12.5 trillion) 4 billion Survival markets: <$3,000 (Size: $5 trillion) Source: IFC, WRI Population Most businesses focus on mature markets, while the huge markets of 6 billion living on less than $20,000/ year remain to be tapped 9
IFC Priority: Fighting Climate Change IFC invested $1.7 billion in energy efficiency, renewable energy, and other climate-friendly projects in FY11 By FY13, over 20% of IFC investments will be in climate-friendly projects, up from 14% last year IFC launched the EUR150 million Post 2012 Carbon Facility in Feb 2012 Along with investments, IFC also adds value to clients through: Advisory services Concessional donor funds 10
IFC s EDGE Tool EDGE: Excellence in Design for Greater Efficiencies IFC developed a green buildings classification system designed for emerging markets: EDGE is a tool that reveals technical solutions for going green and captures capital costs and projected operational savings. EDGE can be used by building professionals without the need for expensive green building specialists. EDGE applied to Hotels The EDGE Standard: A greenfield building that has 20% less energy, water and material consumption compared to an equivalent local benchmark. Specifications EDGE has contextual data of utility costs and climate for different cities EDGE uses building physic calculations to give design-specific results EDGE spells out the most effective technical measures EDGE provides an investment planning tool for building owners and developers 11
Example of IFC s Green Building Client: Artha Capital, Mexico Green Homes Artha Capital provides investments in real estate developments for integrated and sustainable communities in Mexico. IFC s equity investment helped this property fund to acquire land and provide basic infrastructure for 60,000 homes with low-energy lighting and solar water heaters. By taking an approach that integrates industrial, retail, tourism, and residential, Artha Capital creates employment opportunities in communities with high environmental standards, enabling people to live near their place of work. IFC Financing: US$25 million equity Key Features: 80% of developments to be within 200 meters of public transportation options. 50% of all street lighting to use solar-powered LED lighting. 60,000 homes to be constructed with low-energy lighting (CFLs) and solar water heaters. Significance: First example of a green building element in a property fund.
Germany and IFC Shared Goals and Values IFC is increasing its cooperation with the German private and public sectors to capture new opportunities for growth and enhancing development impact A history of collaboration with the Federal Foreign Office, Federal Environment Ministry, Federal Ministry of Economic Cooperation and Development, DEG and KfW IFC and DEG collaborated in developing the report IFIs and Development Through the Private Sector Germany and IFC share common interests particularly in the areas of IDA countries and Africa, climate change and environment, agriculture and food security, fragile and conflict-affected states, gender 13
Select German Clients 2011: Financing of Bayer s farming clients in Ukraine. IFC extended a $70 million risk-sharing facility to Raffeisen Bank Ukraine. 2010: Refurbishment of cement operations in Sub-saharan Africa. IFC provided $110 million equity, $70 million in debt, and IFC AMC provided $35 million equity. 2010: Pulkovo St Peterburg airport. 170 million senior debt, including 100 million B-loan mobilization. 2008: Lima airport. $20 million equity investment from IFC. 2011: Modernization and expansion of metal water management operations in the Balkans and Romania. IFC provided 46 million senior debt. 2009: VW s auto plant in Pune, India. IFC extended 135 million in debt, including 75 million B-loan. 14
IFC cooperation with select German Financial Institutions IFC has over $1 billion in co-investments with DEG and KfW (6/2011). In 2009, DEG and IFC signed a Master Cooperation Agreement. KFW and IFC are partners in the Microfinance Enhancement Facility and the Infrastructure Crisis Facility. 2009 & 2010: Global Trade Liquidity Program GTLP. $75 million unfunded risk-sharing facility on trade portfolio in Africa; $125 million funded risksharing facility to global trade portfolio. As of June 2011: Commerzbank is the 3rd largest German B-loan participant with US$80 million committed exposure. 2011: local currency swap guarantee facility. $100 million risk-sharing facility to support banks with local currency hedging. 2011: Global Climate Partnership Fund. $75 million investment in DBmanaged climate fund. Since 2000, IFC has financed ProCredit s network banks in the Balkans, Ukraine, Romania, Georgia, El Salvador, Ecuador, Nicaragua, & Bolivia. IFC is an equity holder in Procredit Holding. 15
IFC Western Europa (Paris, London, Frankfurt, Brussels) Role Business development with Western European companies that invest in Emerging Markets Mobilization of financing with commercial banks and other IFIs for IFC projects as well as donor grants for IFC technical assistance Coordination mit European Governments and other relevant parties Thank you Olaf Schmidt Global Head Tourism, Retail & Property Investments Manufacturing, Agribusiness & Services Department Principal Investment Officer oschmidt@ifc.org +33 1 40693352 16