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IFC Venture Capital Group

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Presentation on theme: "IFC Venture Capital Group"— Presentation transcript:

1 IFC Venture Capital Group
Presentation for Beijing Energy Network / Beijing Energy & Environment Roundtable March 5, 2014

2 Contents IFC at a Glance IFC’s Venture Capital (VC) Expertise
Work with Us VC Portfolio VC Investment Team VC Case Studies

3 IFC: Part of the World Bank Group
Conciliation and arbitration of investment disputes Guarantees of private sector investment’s non-commercial risks Interest-free loans and grants to governments of poorest countries Loans to middle-income and credit-worthy low-income country governments Solutions in private sector development IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation MIGA Multilateral Investment and Guarantee Agency ICSID International Center for Settlement of Investment Disputes

4 IFC Overview IFC is the member of the World Bank Group focused on the private sector Founded in 1956 with 184 member countries Largest multilateral source of loan/equity financing in Emerging Markets Over $97 Billion Invested Since 1956 AAA-rated by S&P and Moody’s Equity, quasi-equity, loans, risk management and local currency products Takes market risk with no sovereign guarantees Promoter of environmental, social, and corporate governance standards Resources and know-how of a global development bank with the flexibility of a merchant bank Holds equity in over 756 companies worldwide across the following sectors: - Agriculture - Financial Markets - Manufacturing Service - Health & Education - Infrastructure - Oil, Gas and Mining - Telecoms, Media & Technology Holds $77.5 Billion in total assets on the balance sheet

5 IFC’s Three Businesses
IFC Asset Management Company Wholly-owned subsidiary of IFC founded in 2009 Invests third-party capital alongside IFC in a private equity format Allows equity investors to benefit from IFC’s expertise in achieving strong equity returns as well as development impact $5.5 billion under management (FY13) Investment Services Loans Equity Syndicated loans Trade finance Structured finance and securitized products Risk management products Local currency financing $18.3 billion invested in FY13, $49.6 billion committed portfolio Advisory Services Access to finance Environmental and Social sustainability Investment Climate Public-Private Partnerships Infrastructure advise Over $200 million in fee income annually (FY13) Investment services covers the range of financial products for IFC’s own book. This amount covers 612 projects in 113 countries. Approx. 85% of this – or $15.4bn is long-term debt, guarantees and trade finance. Large ticket equity invested into mature companies and projects most of the remainder of $2.8bn. IFC venture capital is a fraction of that amount at approximately $100mm per year. IFC Asset Management Company is fairly new –it was founded in 2009 in response to the financial crisis by raising funds from sovereign and pension funds. IFC’s first AMC fund was targeted at increasing the capitalization of banks. There is a recently raised a $250mm fund called the Catalyst Fund which focuses on climate change-related projects. This is meant to co-invest with IFC in its climate-related projects which is one of the five key areas we are focusing on. In USD as of 30 June 2013

6 IFC Invests across all Regions and Sectors
$18.3 billion invested in FY13 IFC invested in the 12 months that ended June 30, 2013, $18.3 billion total. Excluding Trade Finance, which is short-term, the investment amount was $11.9 billion. For just the Real Sectors, so excluding financial markets, the total was $8.2 billion.

7 IFC’s Priorities Strategic Focus Areas Long-term client relationships
Frontier markets Climate change and environmental & social sustainability Local financial Long-term client relationships in emerging markets Strategic Focus Areas Constraints to private sector growth in infrastructure, health, education, & the food supply chain

8 IFC’s Global Reach 100+ country and regional offices worldwide, AAA credit rating 4,000+ staff (57% are based outside Washington DC) Moscow Hong Kong New Dehli Almaty Istanbul Washington Mexico City Bogota Beunos Aires Sao Paulo Port-of-Spain Dakar Nairobi Johannesburg Cairo Update Map: take star off of Paris and replace with normal dot, take out name “Paris” IFC HQ/Hub Offices IFC Operational Centers IFC Country Offices

9 IFC’s Venture Capital (VC) Expertise
IFC at a Glance IFC’s Venture Capital (VC) Expertise Work with Us VC Portfolio VC Investment Team VC Case studies

10 IFC Venture Capital Mission
While being at the forefront of technological trends and leveraging our convening power, global platform and patient capital base, we foster innovation as well as technology transfer to emerging markets with the continued goal of delivering outsized and measurable development impact. Global innovation will only scale and have impact with significant private sector participation - that is where IFC VC has an important role to play. We operate as both a financial and developmental institution. This developmental mandate is what differentiates IFC from commercial financiers.

11 IFC Track Record in Venture Capital
IT Services - Selective VC investing in IT services with - focus on tech transfer and Asia Cleantech -Dedicated cleantech VC platform established. - Focus on China and India Expanded Cleantech - Expanded into Agribusiness and Water - Regional Expansion into Africa, MENA, LAC ESIP Corporate Venture Platform - Expanded VC mandate beyond cleantech to priority sectors: IT-enabled businesses, education, smart systems, health care - Investing worldwide with a focus on Emerging Markets. Accelerate High Impact Early Stage Innovation for Emerging Markets Background overview of IFC VC, From IT to ESIP Global TIMELINE (FY) 2013/14 and onward Cumulative # of investments 18 32 49 62 (FY14 to date) Total $ invested $110M $193M $491M $582M

12 Strategic Sectors of Focus
Smart Systems Energy E-commerce Renewables and Generation Energy Storage and efficiency LED Business2Business, Business2Consumer Consumer2Consumer Smart grid, Smart buildings Embedded IT Industrial Biotech Agri-tech Water-tech Environmentally friendly Bioderived Chemicals/Fuels/Materials for various applications Land management Natural pesticides natural fertilizers Cold chain logistics Filtration & purification Water conservation Wastewater treatment Telemedicine, healthcare IT, cost efficient innovative devices for human health Waste Recycling Waste to Energy Med-tech Edu-tech Telemedicine Healthcare IT Innovative devices for human health Online education Remote learning Innovative learning models Recycling services Waste treatment Waste to fuel 12

13 How do we define Early-Stage?
Post Technology Risk <-> Pre Mainstream Industry Departments Small deals (albeit not always) Disruptive market change Technology or business model innovation Weak Financial Sponsor Multiple short term capital raisings Complex and multilayered capital structure Incubation Early-stage Growth Mid/Large Cap Mature Investor profile Friends/family, non-institutional PE, some late stage VCs, some debt IFC, PE, debt investors, public markets Venture Capital Speculative –conceptual plays, incubation High Risk – Post product development, some revenues, high growth Medium – Likely profitable Risk profile Low Deal size < US$ 1 mm US$ [1- 15] mm US $5-25 mm > US$ 30 mm Investment risk Technology risk, very limited exits Market, execution and exit risks, some technology risk Late stage execution risk Pricing, M&A, margins IFC Department InfoDev Venture Capital team Industry Departments Industry Departments

14 Work with Us IFC at a Glance IFC’s Venture Capital (VC) Expertise
VC Portfolio VC Investment Team VC Case studies

15 IFC’s Venture Capital Team: A Valuable Partner
Core competence in emerging markets Decades of experience as largest multilateral source of equity financing in emerging markets ü ü Patient capital Full cycle capital access Can seamlessly deliver financial products according to company maturity ü Deep domain expertise Deep knowledge across sectors, with technology expertise ü Breadth of global network Network at local level, across stakeholders ü Convening power Ability to catalyze co-investors ü Active portfolio management Expert investment team can add significant value with hands on involvement ü

16 IFC Venture Capital has developed a strong network of co-investors…

17 Investment Products and Returns
Late Venture & Early Growth Companies Cleantech Innovation Facility Late venture and early growth companies with some revenue traction Moderate technology and commercial risk Select transfer of technology plays 5-7 year exits $5-15 MM per investment For moderate to high risk early stage companies in new technologies or sectors with high development and climate impact, with particular focus on the poorest countries (IDA) (< $5M investments). High risk in early stage companies with high potential growth impact High technology risk Typically transfer of technology plays and new business models 7-10 year exits $3-10 MM per investment

18 VC Portfolio IFC at a Glance IFC’s Venture Capital (VC) Expertise
Work with Us VC Portfolio VC Investment Team VC Case Studies

19 Snapshot of Portfolio Companies
Attero Recycling Private Limited (India) is a pioneer in the nascent domestic e-waste recycling market that operations across the full spectrum of the e-waste recycling activities. Organica Water (Hungary) has developed and is deploying a next-generation wastewater treatment solution, using plant roots, that treat and recycle wastewater in significantly less space, using less energy, and generating less sludge than conventional treatment plants. Microvast, Inc (China) is a growing research and technology driven company offering advanced power solutions for applications including electric vehicles, electric bikes, and power tools, as well as patented battery materials. Fluidic Energy (USA) is a provider of energy storage solutions with significant operations in Southeast Asia. The company supplies zinc-air batteries to support critical loads and backup power applications worldwide. The company’s products include remote site management, multi-year performance warranties and innovative financing terms. Attero, $5mm Organica, $4mm Microvast, $25mm ($15mm) Fluidic, $7mm Kaiima, $10mm Kaiima (Israel) is a plant breeding technology company that has developed an innovative non-GMO technology platform. which promises to deliver yield improvements across a variety of crops that reduce production costs, energy requirements and land use. 19

20 IFC VC – Overview of Committed Investments to date
Fluidic Energy $7 MM Equity CVentures $8 MM Equity Kaiima $10 MM Equity… QD Jason $6 MM Equity TPG ART $25 MM Equity …… Tianren Ecology $8.5 MM Equity …… Organica $4 MM Equity World, 2014 Brazil, 2013 World, 2013 China, 2013 China, 2013 World, 2013 World, 2012 SINOGREEN FUND Nereus Capital $20 MM Equity Ecolibrium $1 MM Equity Kalkitech $1.35 MM Equity… Sinogreen Fund $20 MM Equity RenewGen Ventures $2.2 MM Project equity Haitai $9 MM Equity Infuse Capital $5 MM India, 2012 India, 2012 China, 2012 India, 2012 India, 2012 Sri Lanka, 2012 China, 2011 Attero Recycling $5 MM Equity & Convertible Azure Power $4.5 MM Equity, $5.5 MM Convertible, $1.84 MM Rights Issuance Microvast $25 MM Equity Sunpreme Silicon $25 MM Equity Applied Solar $10 MM debt, $5MM Equity, $3.3 MM Equity Husk Power Systems $0.4 MM Convertible Shuoren Energy $8 MM Equity …… China, 2011 China, 2011 India, 2010 India, India, India, 2010 China, 2009 20

21 VC Investment Team IFC at a Glance
IFC’s Venture Capital (VC) Expertise Work with Us VC Portfolio VC Investment Team VC Case Studies

22 VC Team (DC, Beijing and Mumbai) - Decades of Experience
Nikunj Jinsi, Global Head Washington, DC Hoi Ying So, Investment Officer., Washington, DC Ruzgar Barisik, Senior Investment Officer Washington, DC Sobhi Mahmassani, Assoc. Investment Officer, Washington, DC Pravan Malhotra, Principal Investment Officer Mumbai, India Qinglong Meng, Investment Analyst Beijing, China Sean Petersen, Senior Investment Officer Washington, DC Isabel Ramberg, Investment Analyst Washington, DC Peter Cook, Senior Investment Officer, Beijing, China Nikhil Tambolkar, Investment Analyst Mumbai, India Xiaomin Mou, Investment Officer Beijing, China

23 VC Case Studies IFC at a Glance IFC’s Venture Capital (VC) Expertise
Work with Us VC Portfolio VC Investment Team VC Case Studies

24 Case Study – Organica Water
Organica Water is a Budapest based technology company that has developed and is deploying a next-generation wastewater treatment solution. Organica's technology creates engineered ecosystems, using plant roots, that treat and recycle wastewater in significantly less space, using less energy, and generating less sludge than conventional treatment plants, and thanks to much better odor control integrate well in urban environments.  The technology was conceived in 1998 and the Company has since completed 28+ installations operating worldwide, including in Hungary, France, China and Poland, some for as long as 10 years. In December 2012, IFC led the $10M Series B equity round and invested $4 M. More recently Organica has focused its sales in IFC markets, primarily China, Turkey, Indonesia, India as well as Russia, Ukraine, Eastern Europe and the UK.  IFC's investment will support the Company's growth in emerging markets with a focus on Asia and ECA. Wastewater Treatment Hungary Organica Water IFC Total US$4 million Equity Dec 2012 IFC Value Add: IFC local network and knowledge: Organica has access to IFC’s regional and local staff in China, India, Turkey, Russia, Ukraine and Indonesia, where IFC has active investment, advisory and PPP programs in water infrastructure and utilities. IFC is able to provide knowledge and support to the Company as it navigates through local regulatory framework for municipal wastewater management. Introduction to clients: Through IFC’s existing client base and partners network, IFC has introduced Organica to new sale opportunities: Private water and sanitation utility in Brazil; Listed water and wastewater treatment solutions provider in China; Listed water service utility company in the Philippines; Industrial clients in the textile sector in Bangladesh.

25 Case Study – Kaiima Kaiima is an Israel based plant breeding technology company, which promises to deliver strong yield improvements across a variety of crops that reduce production costs, energy requirements and land use. The technology has the potential to create a transformational change in the seed industry. Kaiima’s seed technology improves cultivation in areas that are experiencing changing climates, especially in China (wheat in the South), Kazakhstan, South Africa, etc. The company operates under three segments: High-impact food crops, such as wheat, rice and corn, which are critical for basic global nutrition; Industrial crops, such as castor, canola and sugarcane, supporting renewable energies; Vegetables, which the Company is now selling in multiple markets around the world; Kaiima's non-GMO technology is also targeted at no-till applications for smallholder farmers. Kaiima was named as a Global Cleantech 100 company. Bio Agri-Tech Israel Kaiima IFC Total US$10 million Equity 2013 IFC Value Add: IFC local network and knowledge: IFC is able to provide knowledge and support to the Company as it seeks to expand into new markets. IFC focuses on ensuring E&S best practices, improving corporate governance and guiding the Company's emerging markets strategy. IFC catalyzed other investors in participating in the Company’s investment round.

26 Contact International Finance Corporation Venture Capital (CTTVC) 2121 Pennsylvania Avenue, NW Washington, DC USA Nikunj Jinsi Global Head, Venture Capital Media Inquiries: Josef Skoldeberg Communications Officer Tel: /

27 Appendix

28 IFC’s VC is uniquely positioned to accelerate early stage innovation in the developing world
Relevant domain expertise (tech + sector) Venture funds IFC Venture Capital Investment banks Global network of local expertise Limited in many dev-eloping geographies, especially IDAs û Breadth of global net-work, at local level, across stake-holders ü Full cycle capital access Company building expertise Deploys only early stage capital Limited ability to fund across capital structure due to incentives Can seamlessly deliver financial products according to company maturity Deep technology expertise, building sector knowledge General knowledge in sectors, lack of technology expertise Deep knowledge across sectors, gaining technology expertise Core competency Extremely limited Experience from a decade in IT VC Success factors We asked McKinsey to conduct an independent review of IFC’s strengths vis a vis supporting cleantech innovation and this is what they heard from venture investors across the globe. IFC is in a powerful position to fill a funding and knowledge gap for Cleantech companies because of a combination of global sector expertise, local knowledge, a full range of financial instruments and it’s track record in VC/growth capital. 28

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