Five Agencies – One Group

World Bank Group Institutional Roles IBRD lends to governments of middle-income developing countries.IBRD lends to governments of middle-income developing countries. IDA provides concessional loans to governments of the poorest developing countries.IDA provides concessional loans to governments of the poorest developing countries. IFC provides loans, equity, structured finance and risk management products, and advisory services to build the private sector in developing countries.IFC provides loans, equity, structured finance and risk management products, and advisory services to build the private sector in developing countries. ICSID facilitates the settlement of investment disputes between governments and foreign investors.ICSID facilitates the settlement of investment disputes between governments and foreign investors. MIGA provides guarantees to foreign investors against noncommercial risk.MIGA provides guarantees to foreign investors against noncommercial risk.

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

Services Offered by IFC Financial products: loans, equity, quasi-equity, guarantees, risk management products; includes transactions in many local currenciesFinancial products: loans, equity, quasi-equity, guarantees, risk management products; includes transactions in many local currencies Resource mobilization: loan participations and structured financeResource mobilization: loan participations and structured finance Technical assistance and advisory services: on environmental/social performance, links with small businesses, corporate governance, capacity building, investment climate—many other issuesTechnical assistance and advisory services: on environmental/social performance, links with small businesses, corporate governance, capacity building, investment climate—many other issues

IFC Country Offices (117)

IFC’s Global Impact

Financial Strength Paid-in capital: $2.4 billion Paid-in capital: $2.4 billion Total capital (net worth): $9.8 billion Total capital (net worth): $9.8 billion Capital strength: IFC’s capital resources currently stand at 50 percent of risk-weighted assets, well above the 30 percent minimum for this ratio required by the capital adequacy policy. Capital strength: IFC’s capital resources currently stand at 50 percent of risk-weighted assets, well above the 30 percent minimum for this ratio required by the capital adequacy policy. (As of June 30, 2005)

IFC’s Operating Income FY 2001– , US $ millions

IFC Staff Profile Over 2,400 staff; almost 1,100 in the field Over 2,400 staff; almost 1,100 in the field More than 120 different nationalities More than 120 different nationalities Specialized skills: Specialized skills:  Investment operations  Private sector development  Environmental and social review  Country and industry expertise  Financial and economic training  Legal

IFC’s Beneficial Role IFC presence reassuresIFC presence reassures  Foreign investors  Local partners  Governments Reputation and standing to help negotiationsReputation and standing to help negotiations Measure of political risk coverMeasure of political risk cover Catalyst for other investors and lendersCatalyst for other investors and lenders

IFC Defining Characteristics Participates only in private sector venturesParticipates only in private sector ventures Shares same risks as other investorsShares same risks as other investors Invests in equity, debt, or structured productsInvests in equity, debt, or structured products Has market pricing policiesHas market pricing policies Does not accept government guaranteesDoes not accept government guarantees Is profit orientedIs profit oriented

Financial Products Equity/Quasi EquityEquity/Quasi Equity Loans - fixed/floating, USD/EUR/local currencyLoans - fixed/floating, USD/EUR/local currency Risk Management - swaps/forwardsRisk Management - swaps/forwards Structured Finance - PCGS, SecuritizationsStructured Finance - PCGS, Securitizations Indirect financing - funds, leasingIndirect financing - funds, leasing SyndicationsSyndications IFC Products

IFC Investment Guidelines 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, and socially soundFinancially, economically, environmentally, and socially sound 25 percent maximum: IFC's share of project cost25 percent maximum: IFC's share of project cost Investment sizeInvestment size  $1 million to $100 million in standard projects  Investments in local financial institutions often support on-lending to small and medium enterprises

Equity investments based on anticipated returnEquity investments based on anticipated return 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 mechanismPublic listing the preferred exit mechanism IFC Private Equity Guidelines

IFC Quasi-Equity Financing Convertible debenturesConvertible debentures Subordinated loansSubordinated loans Income warrantsIncome warrants Other hybrid instrumentsOther hybrid instruments Appropriately pricedAppropriately priced

Investors Look for… Shareholders, management of highest integrityShareholders, management of highest integrity Commercially strong/cost-competitive projectsCommercially strong/cost-competitive projects Robust plans/appropriate financing structureRobust plans/appropriate financing structure 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 Timing Internal to IFC Supervision/Evaluation As Seen by Client Management Approval Board Approval Initial Discussions Mandate Letter Appraisal Financing Negotiations Legal Documentation Conditions Precedent Disbursement Initial Review & Authorization to Appraise

IFC Financing in FY05 *Includes loans, equity, guarantees, risk management products

IFC 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) ,783 2,

IFC Investments FY05, by Sector Total Commitments: $6.45 billion Gross investments, including financing for IFC’s account and loan syndications Sector $ millions Finance and insurance 2,227 Transportation and warehousing 561 Industrial and consumer products 552 Primary metals 330 Pulp and paper 327 Utilities322 Oil, gas, and mining 314 Agriculture and forestry 278 Chemicals237 Nonmetallic mineral product manufacturing 222Sector $ millions Accommodation and tourism services 203 Information200 Collective investment vehicles 188 Wholesale and retail trade 143 Food and beverages 139 Textiles, apparel, and leather 84 Plastics and rubber 41 Education services 39 Construction and real estate 23 Health care 20

IFC Portfolio as of June 30, 2005 By Region Total for IFC’s account: $19.3 billion US$ millions

IFC Portfolio FY05, by Sector SectorExposure $ millions Percent Finance and insurance 6, Utilities1, Oil, gas, and mining 1, Transportation and warehousing 1, Industrial and consumer products 1, Information Collective investment vehicles Food and beverages Nonmetallic mineral product manufacturing Chemicals5753.0SectorExposure $ millions Percent Agriculture and forestry Primary metals Pulp and paper Wholesale and retail trade Accommodation and tourism services Textiles, apparel, and leather Construction and real estate Health care Plastics and rubber Education services Professional, scientific, and technical services Total : $19.3 billion An additional $5.5 billion is held and managed for participants.

Europe & Central Asia US$ millions Investment Commitment FY 2005

FY05 Investments Committed $2.36 billion in financing for 67 Committed $2.36 billion in financing for 67 projects* in 15 countries projects* in 15 countries Project financing (for IFC’s own account): Project financing (for IFC’s own account):  Loans $1,751 million  Equity and quasi-equity $187 million  Guarantees and risk mgt.$0 million Loan syndications $419 million Loan syndications $419 million * *Includes regional share of selected global investments Europe & Central Asia

FY05 Technical Assistance Multidonor facilities: SMEs, corporate governance, infrastructure Multidonor facilities: SMEs, corporate governance, infrastructure  Private Enterprise Partnership (former Soviet Union)  Private Enterprise Partnership-Southeast Europe 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 Asia

Regional Portfolio for IFC’s account FY05 Europe & Central Asia  Russian Federation1,432  Turkey981  Romania409  Ukraine265  Bulgaria253 Largest Country Exposures (millions of U.S. dollars): Largest Country Exposures (millions of U.S. dollars): Total portfolio 5,204.3 Equity and loans Equity and loans5,102.3 Guarantees and risk management products Guarantees and risk management products102.0 US$ millions IFC Portfolio, Europe and Central Asia, FY2005

Russia Invested $2.5 billion for own account and syndicated over $245 millionInvested $2.5 billion for own account and 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 portfolioLargest country exposure in IFC portfolio 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 Russia