Financing Solutions for Urban Infrastructure

IFC Approach to Financing 1

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 co-financing, syndications and guarantees Subordinated loans Income participating loans Convertibles Other hybrid instruments Typically 5-20% shareholding (max 20% of total equity) Long-term investor, typically 5-8 year holding period Not just financial investor, adding to shareholder value Infraventures (early equity investments) FINANCIAL PRODUCTS - FROM EQUITY TO DEBT 2

H OW W E F INANCE P ROJECTS 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 cost less than $50 million Greenfield, total cost more 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 13

IFC Subnational Financial Program 4

5 IFC G LOBAL E XPERIENCE IN S UBNATIONAL F INANCE Total Subnational Finance Program Includes both Municipal Infrastructure and transactions with SOEs and Financial Institutions >US$ 2.0 billion committed >US$ 490 million syndicated >US$ 1.2 billion outstanding 52 projects 41 clients 24 countries Total Municipal Infrastructure > US$ 1.0 billion committed > US$ 300 million syndicated 39 projects 29 clients 15 countries

6 E LIGIBLE C LIENTS UNDER IFC S UB - NATIONAL PROGRAM Municipal and regional governments (LGUs) Municipally and Regionally owned infrastructure service entities Selected state owned infrastructure enterprises (SOEs) Banks and financial intermediaries that finance subnational infrastructure Public Private Partnerships (PPPs) that provide key subnational infrastructure services

7 S ECTOR C OVERAGE Water, wastewater, solid waste management Roads, street lighting, traffic engineering, bus transit systems, intercity rail track Power transmission, gas networks District heating Note: Municipal Infrastructure includes transactions with municipal governments and municipally-owned companies. Social infrastructure, such as health and education Fixed common (landlord) infrastructure in ports and waterways Other essential public services

IFC Subnational Transaction Examples 8

9 S AMPLE OF IFC INVESTMENTS IN E UROPE AND C ENTRAL A SIA Brunswick Rail Eurobond $25 million Lender Russia October 2012 Cernavoda and Pestera Lender Romania June 2011 A Loan: $99.7 million B Loan: $36.2 million Ceska Sporitelna Lender Czech Republic July 2010 $58.4 million Eneriisa II Turkey March 2011 A Loan: $89.9 million B Loan: $712.3 million Lender and Syndicator SEDAS A Loan: $75 million Turkey December 2010 B Loan: $75 million Lender and Syndicator AES Kavarna Lender Bulgaria December 2008 A Loan: $51.8 million B Loan: $41.4 million Shareholder and Lender Croatia Zagreb Airport December 2013 Equity: €19 million A Loan: €35 million Pulkovo Airport Lender and Arranger Russia April 2010 A/C Loan: $70 million B loan: 100 million Podgorica Bypass Montenegro December 2010 A Loan: $15 million Lender Samara Region Lender Russia April 2013 A Loan: $65 million Metropolitan Municipality of Istanbul A Loan: €5 0 million Turkey September 2008 Lender Transport Subnational Power

10 T IMISOARA M UNICIPALITY (R OMANIA ) IFC investment: EUR 35 million senior loan 12-year, 3 (?) years grace Repayment: from the general budget revenues of the Municipality Purpose: co-financing the Municipality’s priority investment program in the total amount of EUR 259 million across 32 projects supported by the EU. IFC co-financing focused on a subset of 17 projects in sectors such as transportation, urban renewal, district heating, social infrastructure and IT & SME support Expected outcome: Reduction in traffic related injuries and deaths Increased safety, mobility, health and education of the local population Supported local SMEs to stimulate private sector growth CO2 emissions reduction by 450,000 tons per year

11 I ZMIR M ETROPOLITAN M UNICIPALITY (T URKEY ) Izmir municipality: 3rd largest city in Turkey Population – 4 million Strong credit: BBB- credit rating (sovereign level) Stable cash flows Strong operating margins (over 40%) Acceptable leverage IFC role: Organizing 5 loans over 3 year period Total amount of financing organized by IFC: €148 million on own account €126.5 million mobilization Sea Transport Traffic Management WastewaterTramwayRailcarsTotal Year IFC€ 45 m€ 28 m€ 55 m€ 20 m€ 148 m AFD€ 45 m€ 55 m€ 20 m EBRD€ 33m€ 38.5 m ING (MIGA) € 33 m€ 55 m€ 38.5 m€ m Total€ 111 m€ 45 m€ 28 m€ 165 m€ 117 m€ m Purpose: 5 large projects of critical importance to the city, including traffic management system, tramways, railcars and water / sanitation

Thank you! 12