International Finance Corporation

May 2013Istanbul

Giovanni DanieleManager, Manufacturing & Chemicals Europe, Middle East and North Africa

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1. IFC Overview

2. Financing Needs in Emerging Markets and ECA: Risks & Opportunities

3. IFC in ECA: results to date and strategy going forward

4. IFC Value Proposition: how IFC can facilitate investment

5. IFC Project Cycle

6. IFC Teams and Contacts

Table of Contents

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

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

• The World Bank Group consists of five closely related institutions:• IBRD: The International Bank for Reconstruction and Development, IDA: The International

Development Association, IFC: International Finance Corporation, MIGA: The Multilateral Investment Guarantee Agency, ICSID: The International Center for the Settlement of Investment Disputes

Who We Are, What We Do

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IFC’s Structure

• Owned by 184 member countries

• IFC is the main driver of private sector development in the World Bank Group

• Collaborates with other members of the group, including the World Bank (IBRD and IDA, MIGA and the International Centre for Settlement of Investment Disputes)

• Global: Headquartered in Washington, D.C.; Operating Center in Istanbul, Turkey

• Local: More than 100 offices worldwide in 95 countries

IFC’s Three Businesses

InvestmentServices

AdvisoryServices

IFC AssetManagement

Company

• Loans• Equity• Trade finance• Syndications• Securitized finance• Blended finance

• 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

$4.5 bn

under mgmt

$56.5 bn

portfolio

$200 mn per

year

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2.5 million jobs

$200 billion in micro, small, and medium enterprise loans

12.2 million patients with health care treatment

34.3 million people with clean water

41.9 million people with power connections

900,000 million students with education

Despite the challenging economic context, IFC invested arecord $20.3 billion for the year

Last year our clients provided:

The Reach of IFC’s Projects (FY12)

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Investments by Region, FY12

Commitments for IFC’s Account: $15.4 Billion Sub-Saharan Africa 18%

East Asia and Pacific 16%

South Asia 8%

Europe and Central Asia 19%

Latin America and the Caribbean 24%

Middle East and North Africa 14%

Global >1%

19% of IFC’s total business is in ECA

Growing Financial Needs for EM globally

• Financing Needs: EM’s as a whole did not face financing needs in the 2005-08 period, but will be facing needs of around $600bn in 2013 – a 68% increase relative to 2012. Financing needs are projected at $1trillion for 2016.

Financing needs in non-IDA countries switched drastically from a surplus in 2005-08 to a deficit of $393bn in 2013 and a projected deficit of $824bn in 2016.

• Capital Flows: Debt and equity flows to EM’s have already recovered to pre-crisis levels, and are projected to keep increasing towards $1.5 trillion by 2016, mainly driven by FDI flows, bond issuance and bank lending.

• Reserve Accumulation is expected around $350bn per year in the 2013-16 period, well below its peak of over $1.3 trillion in 2007.

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ECA and LAC face the largest financing needs

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ECA Financing Needs: largest countries

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Investing in ECA: risk & opportunities going forward

• Coming out of a very difficult period, a number of markets seem to have a more favorable outlook; growth in ECA at around 4 percent is higher than world average

• Financing needs remain large (and growing) and this poses a key risk for the region

• Given low portfolio flows, attracting FDI and bank flows is critical, so is the role of IPAs

• Exposure to EU markets remains a concern• Need to focus on competitiveness and increase

productivity• Opportunities for sector consolidation and regional

expansion by industry leaders

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IFC in ECA

• IFC has been contributing to the development of the private sector in ECA for over 45 years.

• IFC’s five largest exposures are in Turkey, Russia, Ukraine, Romania and Serbia. Turkey is IFC’s fourth largest client in terms of committed portfolio.

• We have offices in 21 countries in ECA

• In the ECA region, since 2008 IFC invested $13.4 billion in 560 projects and mobilized $5.4 billion through other financial institutions.

In 2010, IFC Launched Istanbul Operation Center (IOC)

IFC’s First Operations Center in Istanbul to Serve EMENA Region

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The IOC, with 195 staff, is at the center of a network of regional, sub-regional and smaller country offices,

integrated with Washington DC and working to serve the needs of the EMENA region…

… to deliver a program of over US$6.8 billion in total investment (own account and mobilization) in 171 projects and US$53 million in Advisory Services. (FY12 results)

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IFC Portfolio in ECA

1,4551,879

1,511

2,3262,038

2,299 2,411 2,553

1,749

420242

9371,106

1,545 1,095

128

63

76

59

7984

94

110 110

83

0

20

40

60

80

100

120

0

500

1000

1500

2000

2500

3000

3500

4000

4500

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Europe & Central Asia Mobilization IFC own account Project count

• IFC Annual Commitments in ECA, $mn

(as of February 28,2013)

• ECA Committed Portfolio, $mn( as of March 31,2013)

670

MAS 3,290%32

INFRA 1,987 %20

FM 4,848%48

IFC Sector Priorities in ECA

• SMEs for jobs, economic diversification and higher equality

• Agribusiness for food safety and • Infrastructure & Energy • Climate-smart investments • South-south investment• Health & Education• Supporting regional champions to foster regional

integration and productivity growth

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How IFC can facilitate investment

• Provide political risk mitigation• Long-term tenors• Global expertise combined with local knowledge• Ability to mobilize LT capital (including equity through

AMC)• Advisory services• Equity• Honest broker role• Encouraging adoption of environmental best practices• Long-term relationship across emerging markets

workldwide

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IFC’s Investment Guidelines

• Committed and reputable sponsors with established track record in the industry

• Ability to assume project completion risk• Sound market fundamentals: favorable supply/demand

outlook also taking into consideration new capacity• Cost competitiveness• Absence of market distortions• Prudent capital structures• Adequate risk/return profiles• Sound corporate governance

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Early Review

Client needs determined

Assessment of project’s impacts and development contributions

Management committee approval

Mandate letter

• NegotiationDue Diligence

Assessment of business opportunities and risks

Analysis of environmental and social opportunities and risks

Appraisal

Credit committee approval

Disclosure

Disclosure of environmental and social information

Opportunity for public comment

Monitoring Commitment and Disbursement

Negotiation and agreement of principal terms

Board approval

Signing of legal documents

Disbursement

Annual review of project performance

We agree on a specific timeline to meet client’s needs

IFC’s Project Cycle

How We Finance Projects

• Umbrella for participants in IFC’s syndication program: IFC lender of record, immunity from taxation and provisioning requirements.

• IFC’s total financing (for its own account) must be less than 25% of total company capitalization

Project Type IFC Investment

• Greenfield, total costless than $50 million

• Greenfield, total costmore than $50 million

• Expansion or rehabilitation

• Up to 35% of project cost for IFC’s account

• Up to 25% of project cost for IFC’s account

• Up to 50% of project cost

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Senior Debt

& Equivalents

Equity

Mezzanine / Quasi Equity

• Senior Debt (corporate finance, project finance)• Fixed/floating rates, US$, Euro and local currencies available• Commercial rates, repayment tailored to project/company needs• Long maturities: 8-20 years, appropriate grace periods• Range of security packages suited to project/country• Mobilization of funds from other lenders and investors, through• cofinancings, syndications, underwritings and guarantees

• Subordinated loans• Income participating loans• Convertibles • Other hybrid instruments

• Corporate and JV• Typically 5-15% shareholding (not to exceed 20% of total

equity)• Long-term investor, typically 6-8 year holding period• Not just financial investor, adding to shareholder value• Usually no seat on board• Infraventures (early equity investments)

Financial Products - From Equity to Debt

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Mobilizing Financing - Syndication “B-Loan” Structure

• A loan is for IFC’s own account• B loan is for the account of participant commercial

banks• Only one loan agreement signed by the borrower

and IFC• IFC is the lender of record for the entire loan (A+B)• Structure allows participants to benefit from IFC

privileges and immunities• Better pricing/tenors than otherwise available;

preferred creditor access to foreign exchange• IFC Loans exempt from withholding taxes

Participants

IFC Borrower

Loan Agreement

A + B Loans

B LoanParticipation

Agreement

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IFC Management Team in the Region Istanbul is the new Hub office for the Region

Vice President of IFC

Dimitris Tsitsiragos

(Istanbul)

Regional Director

Tomasz Telma

(Moscow)

Director of

Natural

Resources and

Infrastructure

Gulrez Hoda

(Istanbul)

Director of

Manufacturing,

Agribusiness &

Services

Guy Elena

(Istanbul)

Director of

Financial Markets

Aftab Ahmed

(Istanbul)

Regional Director

Mouayed Makhlouf

(Dubai)

Thank you...

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