A Study on

International Finance Corporation

Presented To:- Presented By:-Dr. Y.C.Joshi Ankit Rathva (11M48)

Ashish Rathod (11F49)

Nilesh Makwana (11F69)

• IFC is the largest global development finance institution focused on the private sector – the global leader in private sector development finance

• Driven by IFC’s vision and purpose, they make a unique contribution to development

• they invest, advise, mobilize capital, and manage assets – providing solutions for an inclusive and sustainable world

• It was established in 1956.

Introduction Of IFC

Vision of IFC is that people should have the opportunity to escape poverty and

improve their lives.

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Objectives of IFC

• Strengthening the focus on frontier markets

• Addressing climate change and ensuring environmental and social sustainability

• Addressing constraints to private sector growth in infrastructure, health, education, and the food-supply chain

• Developing local financial markets

• Building long-term client relationships in emerging markets

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Review of Literature

• Allen Blackman and Geoffrey J. Bannister (1998) in many developing countries the informal sector, comprised of low-technology unlicensed micro-enterprises, is a major source of pollution.

• Environmental management in this sector is exceptionally challenging. Though clean technologies offer a means of mitigating the problem, to our knowledge there has been no rigorous empirical research on why informal (or even small-scale) firms do and do not adopt them.

• As a first step toward filling this gap, this paper presents the results of an econometric analysis of the diffusion of propane among informal “traditional” brick makers in Cd. Juárez, Mexico—a leading source of air pollution owing to their reliance on cheap, highly polluting fuels

such as used tires and scrap wood.

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Objectives of the study

• To study the functions of the IFC

• To study how IFC categorized the business activities

• To study how IFC promotes the growth of the private sector in less developed member countries

• To study investment policies and activities developed by IFC

• To study contribution of IFC in India

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IFC's Vision, Values, & Purpose vision is that people should have the opportunity to escape poverty and improve their

lives.

values are excellence, commitment, integrity, teamwork, and diversity.

purpose is to create opportunity for people to escape poverty and improve their lives by:

• Mobilizing other sources of finance for private enterprise development

• Promoting open and competitive markets in developing countries

• Supporting companies and other private sector partners where there is a gap

• Helping generate productive jobs and deliver essential services to the poor and the vulnerable

• To achieve our purpose, IFC offers development-impact solutions through firm-level interventions (direct investments, advisory services, and the IFC Asset Management Company); by promoting global collective action; by strengthening governance and standard-setting; and through business-enabling-environment work.

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IFC: Reputation and Value• IFC is the world’s largest multilateral private sector investor in the emerging

markets

• AAA rating

• Profitable every year since it was established

• 2,600+ people in our 80 offices worldwide

• In-house syndications department working with over 200 banks

• Global benchmarking – identifies and disseminates international best practice

• Advice on environmental and social issues

• Political risk mitigation

• Preferred creditor status

• IFC Performance Standards adopted through the Equator Principles by over 50 global institutions

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What IFC Do

• Investment Services- In FY11, IFC invested $12.2 billion and 518 projects

- Mobilized an additional $6.5 billion to support private sector in development countries.

• IFC Financial & Investment Projects- Loans

- Syndication Loans- Equity Finance- Structured Finance

- Risk management Projects

- Local Currency & Financing- Trade Finance

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• IFC Asset Management Company- Mobilizes and manages funds on behalf of institutional investors including

sovereign funds, pension funds, and development finance institution.- As of June 30, 2011 had approximately $4.1 billion in assets under

management.

• Funds include- IFC Capitalization Fund- IFC Africa, Latin America and Caribbean Fund- The African Capitalization Fund

• Advisory ServicesBusiness Lines:- Access to Finance- Investment Climate- Sustainable Business- Public-Private Partnerships

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Functions Of IFC• It promotes sustainable private sector development

• Providing financial assistance to the private sector projects and companies

located in the developing world.

• Helping private companies based in the developing world mobilize

financing in the international financial markets.

• Providing advisory and technical assistance to the businesses and

governments

• While the World Bank finances projects with sovereign guarantees only,

the IFC finances projects without sovereign guarantees also. This means

IFC is primarily active in private sector projects

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Cont…

• Like a bank, IFC lends or invests its funds to its customers and expects to make a sufficient risk-adjusted return on its global portfolio of projects.

• IFC supports projects with positive developmental outcomes, and to improve the outcome of such projects by various means.

• IFC provides both investment as well as advisory services.

• IFC's Advisory Services focus basically on five core areas: Access to Finance, Business Enabling Environment, Environmental & Social Sustainability, Infrastructure Advisory, and Corporate Advice.

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IFC’s Operation

• Financing services

• Protection of interest

• Applicability of Certain Foreign Exchange Restrictions

• Valuation of Currencies

• Warning to be Placed on Securities

• Political Activity Prohibited

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IFC Investment Guidelines

Private sector, with strong sponsor commitment Financially, economically, environmentally, and socially sound Maximum IFC share (excluding syndications)

• 25% of project cost over $50 million • 35% of project cost under $50 million • 40% of project costs for expansion projects

Investment size • Typically $5 million to over $100 million

Projects and IFC’s investment are expected to earn competitive and commercial rates of return:

• Comprehensive security package required for loans • Reasonable exits are expected for IFC equity and quasi-equity

investments Expert IFC teams work closely with the client to finalize the investment

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Partners & Stakeholders As a global financier with operations in many regions and sectors, IFC

works with a wide range of groups that have a stake in our projects, are

affected by our work, or help us strengthen our impact on sustainable private sector development.

Our partners, stakeholders, and outreach include:

• Civil society

• Development institutions

• Donors

• Foundations & companies

• IFC member countries

• Media

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Sustainable Development at IFC

• IFC has well established and rigorous standards for environmental, social, and positive economic impact

• IFC works with clients to maximize the positive impact of projects we finance

• In many cases, this leads to reduced risks and long run financial benefits

• Particularly important in African context

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Global Infrastructure Department

• Power

• Renewable Energy

• Transport

• Water

• Infraventures

• Telecoms

• Oil, Gas & Mining

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• A strong financial position

• Low leverage ratios, prudent risk management policies

• A long-term partnership perspective, providing clients important countercyclical financing when commercial banks cut back

• The expertise and experience needed to make a difference, focusing on innovative transactions where our development impact is the highest – creating opportunity where it is needed most

• Affiliation with the World Bank

they are well-positioned to help clients in good times and bad they offer:

A Valuable Partner

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IFC’s Global Reach

100+ country and regional offices worldwide

3,500 staff, of which 55% are outside of Washington

Dakar

Nairobi

Johannesburg

Cairo

Washington

Mexico City

Bogota

Buenos Aires

São Paulo

Port-of-Spain

Moscow

IFC HQ/Hub OfficesIFC Operational CenterIFC Country Offices

Hong Kong

New Delhi

Almaty

Istanbul

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Their Core Businesses

InvestmentServices

AdvisoryServices

AssetManagement

Company

• Loans

• Equity

• Trade finance

• Syndications

• Securitized finance

• Other financial products

• Access to finance

• Sustainable Business

• Investment Climate

• Public-Private Partnerships

• Wholly owned subsidiary of IFC

• Private equity fund manager

• Invests third-party capital alongside IFC

$4.1b under mgmt

$55.2 b portfolio

$200m per year

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The Reach of IFC’s Projects

Last year their clients provided:

• 2.2 million jobs

• $112 billion in micro, small, and medium enterprise loans

• 8 million patients with health care treatment

• 35 million people with clean water

• 1.4 million students with education services

IFC’s activities help raise living standards for people throughout the developing world

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Financing Criteria

• Located in a developing country that is a member of IFC

• Be in the private sector

• Be technically sound

• Have good prospects of being profitable

• Benefit the local economy

• Be environmentally and socially sound, satisfying IFC environmental and social standards as theyll as those of the host country

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IFC Financing

IFC’s own account Mobilization*

0

5

10

15

20

FY07 FY08 FY09 FY10 FY11 FY12

$20bn

$15bn

$10bn

$5bn

$0

* Mobilization includes syndicated loans, structured finance, IFC initiatives and other, and IFC Asset Management Company.

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Investments by Region, FY11

Commitments for IFC’s Account: $12.2 Billion

Sub-Saharan Africa 18%

East Asia and Pacific 16%

South Asia 6%

Europe and Central Asia 22%

Latin America and the Caribbean 25%

Middle East and North Africa 13%Global >1%

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Investments by Industry, FY11

Consumer & Social Services4%

Commitments for IFC’s Account: $12.2 Billion

Infrastructure13%Manufacturing

7%

Other Sectors>1%

Telecommunications& Information Technology3%

Agribusiness & Forestry4%

Financial Markets25%

Funds4%

Oil, Gas & Mining2%

Trade Finance38%

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IFC and India(Reducing poverty together)

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• Long term partner-first investment in India in 1958

• Regional hub of south Africa (including Bangladesh, Bhutan, Maldives, Nepal, Sri lanka)

• Office in India Delhi, Mumbai, Chennai, and Kolkata.

• Cumulative IFC investments, India-march 2012 ($6.8bn)

• IFC committed portfolio , India- December 2012 ($3.6bn)

• IFC against AIDS

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IFC In India

• Since 1956, IFC has invested in 264 companies in India, providing over $7 billion in financing for its own account and $2.1 billion in mobilization from external resources.

• portfolio of $3.7 billion (as of June 2012) makes India IFC's largest country of operations

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IFC investment in India

1950-60: Kirloskar Oil Engines

1970: HDFC, Zauri Industries etc.

1980: Ashok Leyland, mahendra & Mahindra, Tata steel, etc

1990: Moser baer, IDFC, Jet Airways,

2000: Apollo tyres, Dabur Pharma, ING vysya, TVS motors, Cairn India etc.

2010: Central bank of india, Auro mira and Utkarsh Microfinance28

What does IFC look for in its people?

• Technical expertise

• Diverse nationalities and experience

• Strong interpersonal and teamwork skills

• Commitment to the IFC mission

• Leadership potential

• Language proficiency

• Enthusiasm for working in a multicultural environment

• Interest to live in emerging markets

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Global Recognition

Best Overall Development Finance Institution and Best

DFI in Africa

Trade Finance Magazine

July 2011

Renewable Deal of the Year for Asia Pacific (China WindPotheyr

Group)

Project Finance International

June 2011

Deal of the Decade Award (BTC Pipeline)

Infrastructure Journal

April 2011

Multilateral of the Year Award

Project Finance International

January 2011

Multilateral Agency of the

Year

Infrastructure Journal

April 2011

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• IFC is the largest global development finance institution focused on the private sector – the global leader in private sector development finance

• they create opportunity for people – to escape poverty and improve their lives

• Driven by our vision and purpose, they make a unique contributionto development

• they invest, advise, mobilize capital, and manage assets – providing solutions for an inclusive and sustainable world

Who they Are, What they Do

Conclusion

• IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.

• IFC Industries (Sectors) are in charge of processing IFC transactions. They also provide the Regional Departments with the expertise and knowledge needed to process new projects.

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The most sensitive needs for energy, water, roads, phone connections, healthcare, education, sanitation, waste management, access to financial services, are among those who live in low-income, rural and semi-urban parts of the country. For this IFC works for following sectors.

• Building infrastructure and assisting public-private-partnerships;

• Facilitating renewable energy generation; promoting cleaner production, energy and water efficiency;

• Supporting agriculture for improved food security;

• Creating growth opportunities for small businesses;

• Reforming investment climate;

• Developing public-private partnerships;

• Encouraging low-income housing; and

• Making affordable healthcare efficient and accessible.

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THANK YOU

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