Five Agencies – One Group

World Bank Group Institutional RolesWorld Bank Group Institutional Roles• IBRD lends to governments of middle-income IBRD lends to governments of middle-income

developing countries.developing countries.

• IDA provides concessional loans to IDA provides concessional loans to governments of the poorest developing governments of the poorest developing countries.countries.

• IFC provides loans, equity, structured finance IFC provides loans, equity, structured finance and risk management products, and advisory and risk management products, and advisory services to build the private sector in services to build the private sector in developing countries. developing countries.

• ICSID facilitates the settlement of investment ICSID facilitates the settlement of investment disputes between governments and foreign disputes between governments and foreign investors.investors.

• MIGA provides guarantees to foreign investors MIGA provides guarantees to foreign investors against noncommercial risk.against noncommercial risk.

IFC’s MissionIFC’s Mission

To promote sustainable To promote sustainable private sector investment private sector investment in developing countries, in developing countries, helping to reduce poverty helping to reduce poverty and improve people’s livesand improve people’s lives

Services Offered by IFCServices Offered by IFCServices Offered by IFCServices Offered by IFC

• Financial productsFinancial products:: loans, equity, quasi-loans, equity, quasi-equity, guarantees, risk management equity, guarantees, risk management products; includes transactions in many local products; includes transactions in many local currenciescurrencies

• Resource mobilizationResource mobilization:: loan participations loan participations and structured financeand structured finance

• Technical assistance and advisory Technical assistance and advisory servicesservices:: on environmental/social on environmental/social performance, links with small businesses, performance, links with small businesses, corporate governance, capacity building, corporate governance, capacity building, investment climate—many other issuesinvestment climate—many other issues

IFC Country Offices (117)IFC Country Offices (117)

London, U.K.London, U.K.Frankfurt, GermanyFrankfurt, Germany

HQ, Washington D.C.

Warsaw, Warsaw, PolandPoland

Tirana, AlbaniaTirana, Albania

Sarajevo, Bosnia-HerzegoviniaSarajevo, Bosnia-Herzegovinia

Prague, Czech RepublicPrague, Czech Republic

Moscow, Russian FederationMoscow, Russian Federation

Minsk, BelarusMinsk, Belarus

Kiev, UkraineKiev, Ukraine

Sofia, BulgariaSofia, Bulgaria

Istanbul, TurkeyIstanbul, Turkey

Bucharest, Romania Bucharest, Romania

Yerevan, AmeniaYerevan, AmeniaTbilisi, GeorgiaTbilisi, Georgia

Mexico City, Mexico

Santa Domingo, Dominican Republic

Port of Spain, Trinidad and Tobago

Bogotá, Colombia

La Paz, Bolivia

Rio de Janeiro, BrazilRio de Janeiro, Brazil

Sao Paulo, BrazilSao Paulo, Brazil

Buenos Aires, Argentina

Johannesburg, South AfricaJohannesburg, South Africa

Nairobi, KenyaNairobi, KenyaLagos, NigeriaLagos, Nigeria

Accra, GhanaAccra, GhanaAbidjan, Côte d’IvoireAbidjan, Côte d’Ivoire

Cairo, EgyptCairo, Egypt

Sydney, Australia

Jakarta, Jakarta, IndonesiaIndonesia

Colombo, Colombo, Sri LankaSri Lanka

Phnom Penh, Cambodia

Manila, Philippines

Bangkok, Bangkok, ThailandThailand

Vientiane, Lao P.D.R

Hanoi, VietnamHanoi, VietnamMumbai,IndiaMumbai,India

Hong Kong, China

Chengdu, ChinaChengdu, ChinaTokyo, Japan

Beijing, China

New Delhi, New Delhi, IndiaIndia

Islamabad, Islamabad, PakistanPakistan

Tashkent, UzbekistanTashkent, Uzbekistan

Dushanbe,TajikistanDushanbe,Tajikistan

Almaty, KazakhstanAlmaty, Kazakhstan

Bishek,Krygyz Rep.Bishek,Krygyz Rep.

Baku, AzerbaijanBaku, Azerbaijan

Ho Chi Minnh, Vietnam

Dubai, UAEDubai, UAE

Skopje, MacedoniaSkopje, Macedonia

Belgrade, SerbiaBelgrade, Serbia

IFC’s Global ImpactIFC’s Global Impact

Financial StrengthFinancial Strength

• Paid-in capitalPaid-in capital:: $2.4 billion $2.4 billion

• Total capital (net worth)Total capital (net worth):: $9.8 $9.8 billionbillion

• Capital strengthCapital strength:: IFC’s capital IFC’s capital resources currently stand at 50 resources currently stand at 50 percent of risk-weighted assets, well percent of risk-weighted assets, well above the 30 percent minimum for above the 30 percent minimum for this ratio required by the capital this ratio required by the capital adequacy policy.adequacy policy.

(As of June 30, 2005)

IFC’s Operating IncomeFY 2001–2005IFC’s Operating IncomeFY 2001–2005

0

100

200

300

400

500

600

700

800

900

1,000

1,100

FY01 FY02 FY03 FY04 FY05

982

241161

1,950

528

US $ millions

IFC Staff ProfileIFC Staff Profile

•Over 2,400 staff; almost 1,100 in the fieldOver 2,400 staff; almost 1,100 in the field•More than 120 different nationalitiesMore than 120 different nationalities•Specialized skills:Specialized skills:

Investment operations Investment operations Private sector developmentPrivate sector development Environmental and social reviewEnvironmental and social review Country and industry expertiseCountry and industry expertise Financial and economic trainingFinancial and economic training LegalLegal

IFC’s Beneficial RoleIFC’s Beneficial Role

• IFC presence reassuresIFC presence reassures Foreign investorsForeign investors Local partnersLocal partners GovernmentsGovernments

• Reputation and standing to help Reputation and standing to help negotiationsnegotiations

• Measure of political risk coverMeasure of political risk cover

• Catalyst for other investors and lendersCatalyst for other investors and lenders

IFC Defining CharacteristicsIFC Defining Characteristics

• Participates only in private sector Participates only in private sector venturesventures

• Shares same risks as other investorsShares same risks as other investors• Invests in equity, debt, or structured Invests in equity, debt, or structured

productsproducts• Has market pricing policiesHas market pricing policies• Does not accept government guaranteesDoes not accept government guarantees• Is profit orientedIs profit oriented

Financial ProductsFinancial Products

• Equity/Quasi EquityEquity/Quasi Equity

• Loans - fixed/floating, USD/EUR/local Loans - fixed/floating, USD/EUR/local currencycurrency

• Risk Management - swaps/forwardsRisk Management - swaps/forwards

• Structured Finance - PCGS, SecuritizationsStructured Finance - PCGS, Securitizations

• Indirect financing - funds, leasingIndirect financing - funds, leasing

• SyndicationsSyndications

IFC ProductsIFC Products

IFC Investment GuidelinesIFC Investment Guidelines

A project must be :A project must be :• In the private sectorIn the private sector• Shareholders/co-investors of highest integrityShareholders/co-investors of highest integrity• Financially, economically, environmentally, Financially, economically, environmentally,

and socially soundand socially sound• 25 percent maximum: IFC's share of project 25 percent maximum: IFC's share of project

costcost• Investment sizeInvestment size

$1 million to $100 million in standard projects$1 million to $100 million in standard projects Investments in local financial institutions often Investments in local financial institutions often

support on-lending to small and medium support on-lending to small and medium enterprisesenterprises

• Equity investments based on anticipated Equity investments based on anticipated returnreturn

• IFC not normally the largest shareholderIFC not normally the largest shareholder• Strictly not more than 35 percentStrictly not more than 35 percent• In practice, not more than 20 percentIn practice, not more than 20 percent

• Passive investorPassive investor• Often considered “local” shareholderOften considered “local” shareholder• Long-term investor of 6 to 15 yearsLong-term investor of 6 to 15 years• Public listing the preferred exit Public listing the preferred exit

mechanismmechanism

IFC Private Equity GuidelinesIFC Private Equity Guidelines

IFC Quasi-IFC Quasi-Equity FinancingEquity FinancingIFC Quasi-IFC Quasi-Equity FinancingEquity Financing

• Convertible debenturesConvertible debentures• Subordinated loansSubordinated loans• Income warrantsIncome warrants• Other hybrid instrumentsOther hybrid instruments• Appropriately pricedAppropriately priced

Investors Look for…Investors Look for…

• Shareholders, management of highest Shareholders, management of highest integrityintegrity

• Commercially strong/cost-competitive Commercially strong/cost-competitive projectsprojects

• Robust plans/appropriate financing Robust plans/appropriate financing structurestructure

• Completion guarantees and securityCompletion guarantees and security• Sound environmental and social practicesSound environmental and social practices• Appropriate sharing of risks and rewardsAppropriate sharing of risks and rewards• Market-related fees, rates and returnsMarket-related fees, rates and returns

Project Cycle and TimingProject Cycle and Timing

Internal to IFC

Supervision/Evaluation

As Seen by Client

Management Approval

Board Approval

Initial Discussions

Mandate LetterAppraisal

Financing Negotiations

Legal Documentation Conditions Precedent

Disbursement

Initial Review & Authorization

to Appraise

IFC Financing in FY05IFC Financing in FY05

IFC CommitmentsFY05 Total: $6.45 billion

0

1

2

3

4

5

6

2001 2002 2003 2004 2005

U.S

.$ b

illi

ons IFC's own

account*

Syndications

*Includes loans, equity, guarantees, risk management products

IFC Committed Financing, FY05 By RegionIFC Committed Financing, FY05 By Region

Total committed IFC financing: $6.45 billion

($5.37 billion for IFC’s account, $1.08 billion held for others)

445

812

643

1,783

2,357

31595

IFC Investments FY05, by SectorIFC Investments FY05, by Sector

Total Commitments: $6.45 billion

Gross investments, including financing for IFC’s account and loan syndications

SectorSector $ millions$ millions

Finance and insuranceFinance and insurance 2,2272,227

Transportation and Transportation and warehousingwarehousing

561561

Industrial and consumer Industrial and consumer productsproducts

552552

Primary metalsPrimary metals 330330

Pulp and paperPulp and paper 327327

UtilitiesUtilities 322322

Oil, gas, and miningOil, gas, and mining 314314

Agriculture and forestryAgriculture and forestry 278278

Chemicals Chemicals 237237

Nonmetallic mineral product Nonmetallic mineral product manufacturingmanufacturing

222222

SectorSector $ millions$ millions

Accommodation and tourism Accommodation and tourism servicesservices

203203

InformationInformation 200200

Collective investment vehiclesCollective investment vehicles 188188

Wholesale and retail tradeWholesale and retail trade 143143

Food and beveragesFood and beverages 139139

Textiles, apparel, and leatherTextiles, apparel, and leather 8484

Plastics and rubberPlastics and rubber 4141

Education services Education services 3939

Construction and real estateConstruction and real estate 2323

Health careHealth care 2020

IFC Portfolio as of June 30, 2005By RegionIFC Portfolio as of June 30, 2005By Region

Total for IFC’s account: $19.3 billionTotal for IFC’s account: $19.3 billion

250

1,210

6,130

5,420

1,630

2,940

1,700

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Sub-SaharanAfrica

East Asia &Pacific

South Asia Europe &Central Asia

Latin America& Caribbean

Middle East &North Africa

Global

US$ millions

IFC Portfolio IFC Portfolio FY05, by SectorFY05, by Sector

SectorSector ExposureExposure$ millions$ millions

PercentPercent

Finance and insuranceFinance and insurance 6,2356,235 32.3 32.3

UtilitiesUtilities 1,8381,838 9.59.5

Oil, gas, and miningOil, gas, and mining 1,4231,423 7.47.4

Transportation and Transportation and warehousingwarehousing

1,2041,204 6.26.2

Industrial and consumer Industrial and consumer productsproducts

1,0501,050 5.45.4

InformationInformation 936936 4.94.9

Collective investment Collective investment vehiclesvehicles

923923 4.84.8

Food and beveragesFood and beverages 824824 4.34.3

Nonmetallic mineral Nonmetallic mineral product manufacturingproduct manufacturing

769769 4.04.0

ChemicalsChemicals 575575 3.03.0

SectorSector ExposureExposure$ millions$ millions

PercentPercent

Agriculture and forestryAgriculture and forestry 539539 2.82.8

Primary metalsPrimary metals 512512 2.72.7

Pulp and paperPulp and paper 509509 2.62.6

Wholesale and retail tradeWholesale and retail trade 469469 2.42.4

Accommodation and Accommodation and tourism servicestourism services

420420 2.22.2

Textiles, apparel, and Textiles, apparel, and leatherleather

366366 1.91.9

Construction and real Construction and real estateestate

177177 0.90.9

Health careHealth care 173173 0.90.9

Plastics and rubberPlastics and rubber 158158 0.80.8

Education servicesEducation services 101101 0.50.5

Professional, scientific, Professional, scientific, and technical servicesand technical services

7373 0.40.4

Total : $19.3 billionAn additional $5.5 billion is held and managed for participants.

Europe & Central AsiaEurope & Central AsiaEurope & Central AsiaEurope & Central Asia

US$ millions

Investment Commitment FY 2005

FY05 InvestmentsFY05 InvestmentsFY05 InvestmentsFY05 Investments

• Committed $2.36 billion in Committed $2.36 billion in financing for 67financing for 67 projects* in 15 countriesprojects* in 15 countries

• Project financing (for IFC’s own Project financing (for IFC’s own account):account):

Loans Loans $1,751 million$1,751 million

Equity and quasi-equity Equity and quasi-equity $187 million$187 million

Guarantees and risk mgt.Guarantees and risk mgt.$0 million$0 million

• Loan syndicationsLoan syndications $419 million$419 million

**Includes regional share of selected global investments

Europe & Central AsiaEurope & Central Asia

FY05 Technical AssistanceFY05 Technical AssistanceFY05 Technical AssistanceFY05 Technical Assistance

• Multidonor facilities: SMEs, corporate Multidonor facilities: SMEs, corporate governance, infrastructuregovernance, infrastructure

Private Enterprise Partnership (former Soviet Private Enterprise Partnership (former Soviet Union)Union)

Private Enterprise Partnership-Southeast Private Enterprise Partnership-Southeast EuropeEurope

• Investment climateInvestment climate

• Financial market developmentFinancial market development

• Privatization and post-privatizationPrivatization and post-privatization

• Links between major investments, SMEsLinks between major investments, SMEs

• Public-private partnershipsPublic-private partnerships

Europe & Central AsiaEurope & Central Asia

Regional Regional Portfolio Portfolio for IFC’s for IFC’s account FY05account FY05

Europe & Central AsiaEurope & Central Asia

Russian FederationRussian Federation 1,4321,432 TurkeyTurkey 981981 RomaniaRomania 409409 UkraineUkraine 265265 BulgariaBulgaria 253253

Largest Country Exposures Largest Country Exposures (millions of U.S. dollars):(millions of U.S. dollars):

Total portfolioTotal portfolio 5,204.35,204.3

Equity and loansEquity and loans 5,102.35,102.3

Guarantees and risk management productsGuarantees and risk management products 102.0102.0

US$ millionsIFC Portfolio, Europe and Central Asia, FY2005IFC Portfolio, Europe and Central Asia, FY2005

Russia

• Invested $2.5 billion for own account Invested $2.5 billion for own account and syndicated over $245 millionand syndicated over $245 million

• > 120 projects in a variety of sectors > 120 projects in a variety of sectors • Committed portfolio of $1.8 billionCommitted portfolio of $1.8 billion

• $154 million in straight equity & equity funds$154 million in straight equity & equity funds

• Largest country exposure in IFC Largest country exposure in IFC portfolioportfolio

As of March 1, 2006:As of March 1, 2006:

Russia – Equity Portfolio

• Russian Standard BankRussian Standard Bank• Absolut BankAbsolut Bank• Yandex (via ru-Net Holdings)Yandex (via ru-Net Holdings)• IBSIBS• TV3TV3• VladpivoVladpivo• NovatekNovatek

Selected Examples of Equity Investments in RussiaSelected Examples of Equity Investments in Russia