Conservation Finance Activities International Finance Corporation Sustainable Conservation Finance Retreat Harbourtowne, Maryland February 2002

IFC Overview  Private Sector Arm of World Bank Group  Investment bank that provides equity, debt & advisory services (e.g., development of concessions)  In FY 2001, IFC approved US$ 3.7 billion of investments in 240 projects  As GEF Executing Agency, IFC has a $129M portfolio (12 projects) and $20M p.a. pipeline  Highly innovative projects that have pioneered the use of non-grant financing (e.g., loans, guarantees, contingent finance, equity)

IFC’s Approach to Conservation Finance  IFC approaches conservation finance from a private sector angle.  IFC’s projects aim to generate sustainable conservation financing by catalyzing viable businesses.  IFC searches for instances where there is a business case to support biodiversity conservation.  IFC seeks innovative business models.  IFC seeks to finance projects on a commercial basis; IFC tries to minimize concessional funds.

IFC’s Approach to Conservation Finance  IFC develops projects that provide long-term conservation finance via:  Concession Fees (e.g., river concessions, tourism concessions in parks)  Ecotourism Fees  Business Profits

IFC’s Biodiversity Investments  Terra Capital Fund  $15 M private equity fund for LAC ($4 M IFC + $5 M GEF)  Small and Medium Scale Enterprise Program  Provides loans of up to $1M to financial intermediaries (e.g., CI, TNC) who on-lend for shade-grown coffee, ecotourism, organic agriculture, etc.  Conservera Amazónica (Peru)  $4 M FSC-certified hearts-of-palm project in the Amazon Rainforest  Ecotourism Investments  Equity investments and loans for lodges in or near conservation areas (e.g., Boundary Hill, Inka Terra, A&K); in some cases GEF grants are used to catalyze incremental biodiversity-benefiting activities

Terra Capital Fund Equity Investments to Date  Certified Pure Ingredients Organic berry farming (Chile)  Muaná Alimentos FSC-certified hearts-of-palm company; located in the Amazon river estuary (Island of Marajo, Brazil)  Tobasa Bioindustrial Harvesting and processing of babassu coconut in the Amazon (Tocantins State, Brazil)  CIAPAR Organic vegetables farming (Sao Paulo, Brazil)  Frezzi Organic grapes in Argentina

Symbio F Polish company that assists small-scale farmers in buffer zones to convert to organic agriculture Symbio buys the products and sells them into EU wholesale market, making a margin on the sale F Symbio’s principle barrier to growth is the inability to acquire working capital (WC) Banks won’t provide a credit line due to high perceived risks, lack of familiarity with organic sector, and weak balance sheet F 3-4 year guarantee is being offered to Polish bank so that it extends WC credit line to Symbio Guarantee will be scaled down each year as Symbio strengthens its balance sheet and meets financial performance indicators Example SME Investment:

IFC/GEF Biodiversity Pipeline F Komodo National Park Concession Concession awarded to JV (which involves TNC and will receive no financial returns). GEF grant will help cover management costs during initial years; it will be scaled down and eliminated after 7 years as park revenues increase. F EcoEnterprises Fund TNC-managed investment fund and technical assistance facility for small-scale ventures in Latin America with strong links to local NGOs F Kijani Initiative Investment Fund and Business Development Facility for biodiversity projects in Africa F European Conservation Farming Initiative Investment fund and Tech. Assistance Facility to catalyze shift to conservation farming in Central and Eastern Europe

Asian Conservation Corporation & Foundation F The Asian Conservation Foundation (ACF) will fund conservation activities run by local NGOs in priority areas in the Philippines GEF and other grant funding will be used for 5-7 years F The Asian Conservation Corporation (ACC) is a holding company that takes majority (or significant minority) equity stakes in for-profit ventures that can provide biodiversity benefits in priority areas The ACC will pass board resolutions or include clauses in its share purchase agreements that obligate investee companies to fundthe ACF after its grant funding runs out.

Fly-Fishing Concessions in Mongolia and Kamchatka F Eg-Uur Watershed (Mongolia) Mongolia-American JV will receive concession to operate fly fishing trips on pristine river; GEF funds will catalyze conservation activities for surrounding watershed; conservation activities will be sustained by ongoing concession fees. F Kamchatka Wild Salmon Center Project (Russia) Innovative financial mechanism (e.g., dedicated credit line or guarantee facility) to get domestic and foreign outfitters to jointly develop sustainable sport fishing operations on watersheds throughout the Kamchatka Peninsula. Project will develop concessions and a certification system for environmentally-friendly sport fishing operations.

Poison Dart Frog Ranching  IFC is catalyzing a new Peruvian venture that will save rainforest & alleviate poverty via sustainable production of poison dart frogs  By overcoming the limiting factor (i.e., # of suitable breeding sites) the project can produce a surplus population for export to U.S. and Europe.  Profits will fund park rangers & community projects

IFC’s Staff  IFC has only several individuals who focus on conservation finance, but we can leverage:  Many in-house economists, engineers, lawyers, environmental & social specialists, and investment officers (IFC is the highest concentration of MBAs in Washington!);  Biodiversity expertise of the World Bank & IUCN (Deborah Vorhies is based at IUCN headquarters);and  Top consultants for project development purposes.

IFC’s Expertise regarding Conservation Finance  Business Appraisal:  Tremendous in-house capabilities regarding financial, technical, environmental, social, legal, and economic analysis.  Extensive investment experience in many sectors & countries  Concession Design:  IFC can leverage its experience with water, electricity, & tourism concessions  Investment Structuring:  IFC can structure equity, quasi-equity, debt, guarantees, etc. for for-profit ventures in developing countries.

IFC’s Needs & Potential Role in Conservation Finance Alliance  IFC’s Needs:  IFC is looking for viable business opportunities that will benefit biodiversity conservation.  IFC’s Potential Contributions:  For viable projects, IFC could provide significant financial engineering expertise as well as commercial and/or concessional financing