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Transcript of Managing Risks & Facilitating Private Investments Risks & Facilitating Private Investments...

  • Anil Chandramani

    Chief Investment Officer and Global

    Relationship Executive, Chemicals & Fertilizers

    1

    Managing Risks & Facilitating Private

    Investments in the

    Chemicals & Petrochemicals Industry

    In Egypt & MENA

    Egypt Downstream Summit

    Cairo, February 15-16, 2016

  • The World Bank Group and IFC

    IBRDInternational Bank for Reconstruction and Development

    IDAInternational Development Association

    IFCInternational Finance Corporation

    MIGAMultilateral Investment and

    Guarantee Agency

    To promote institutional,

    legal and regulatory

    reform

    Governments of poorest

    countries with per capita

    income of less than

    $1,025

    - Technical assistance

    - Interest Free Loans

    - Policy Advice

    To promote private

    sector development

    Private companies in

    member countries

    - Equity/Quasi-Equity

    - Long-term Loans

    - Short-term Finance

    - Risk Management

    - Advisory Services

    To reduce political

    investment risk

    Foreign investors in

    member countries

    - Political Risk Insurance

    Est. 1945 Est. 1960Est. 1956 Est. 1988

    Role:

    Clients:

    Products:

    To promote institutional,

    legal and regulatory

    reform

    Governments of member

    countries with per capita

    income between $1,025

    and $6,055

    - Technical assistance

    - Loans

    - Policy Advice

    Private Sector Support Public Sector Support

    2

    The Mission of IFC is to promote private sector investment in developing countries to reduce poverty and improve people's lives

  • Holding $50Bn Portfolio

    IFC in FY15

    S&P, Moodys AAA

    Committed 2014 $17.7 billion- Syndicated $7.1 billion- Own Account $10.5 billion

    # of projects 406# of countries 83

    Committed Portfolio (IFC balance) by region

    Committed Portfolio (IFC balance) by sector

    * Manufacturing includes the following subsectors: Chemicals/Petrochemicals, Construction Materials and Energy Efficient Machinery

    Largest multilateral source of loan and equity financing for the private sector in emerging markets

    Takes market risk with no sovereign guarantees

    Promoter of environmental, social, and corporate governance standards

    Resources and know-how of a global development bank + flexibility of a merchant bank

    Portfolio of over 2,000 companies worldwide

    Holds equity and quasi-equity in over 800 companies worldwide: Honest Broker Role

    Loans may be foreign currency or, in several countries, may be in local currency

    Manufacturing,

    Agribusiness

    and Services

    29%

    Financial

    Markets

    43%

    Infrastructure

    and Natural

    Resources

    28%

    3

    Latin America and the

    Caribbean22%

    Europe and Central Asia

    18%

    Sub-Saharan Africa17%

    East Asia and the Pacific

    17%

    South Asia12%

    Middle East and North

    Africa12%

    RoW2%

  • > US$7 billions invested (own

    account)

    > 300 projects

    > 50 countries

    Chemicals, Petrochemicals & Fertilizers Sector

    Key Features

    (historical)

    Key Features

    (historical)

    Committed Amount by Sector

    In-house industry specialists with global experience in

    the sector and benchmarking capabilities

    Strong regional knowledge with exclusive focus on

    emerging markets

    Climate change strategy

    Promotion of sustainable economic growth and

    competitiveness with creation of direct and indirect

    jobs, know-how transfer

    Committed Amount by Region

    4

  • Engro Corporate, PakistanICS, Senegal: phosphoric acidIndo Jordan, Jordan: phosphoric acidEngro Chemicals, Pakistan: ammoniaTrigen II, Trinidad & Tobago: ammoniaFosfertil, Brazil: SSP, TSP, MSP, DAPGNFC, India: ammonia, ureaDeepak Nitrate, India: ammonia,Urea,DAPPQB, Bolivia: ammonium nitrateKuAz, Russia: ammonia, ureaIndo Egyptian, Egypt: phosphoric acidKoyo, China: ammonia, ureaAbocol, Colombia: ammonium nitrate,NPKJIFCO, Jordan: DAPJPMC, Jordan: phosphateEngro Emergency, Pakistan: ureaOCI Egypt: Corporate loan for fertilizersParadeep Phosphates, India: DAPItafos Brazil: PhosRock & Acid

    A Sample of IFCs Industry Experience

    ERC Refinery, EgyptPSPC (Shell), PhilippinesStar Petroleum (Caltex), ThailandRefisan (Pecom), ArgentinaPetrotel-Lukoil, RomaniaAlliance Oil Company, Russia

    Refineries

    Petrochemicals

    Continental Carbon of India Ltd.NPC, Thailand: gas crackerCopesul, Brazil: naptha crackerCopene, Brazil: naptha crackerSamsung, Korea: petrochem/aromatics

    complex restructuringHMC Polymers, Thailand: PPPetroken, Argentina: PPPoliteno, Brazil: PEIpiranga I & II, Brazil: PE, PP Indelpro, MexicoProfalca, Venezuela: PPGrupo Zuliano, Venezuela: petrochem complexSuzhou, China: PVCVinythai, Thailand: PVCEngro PVC, Pakistan: PVCTuntex, Thailand: PTARhodiaco, Brazil: PTARhodia-ster, Brazil: PTA/PETOxiteno, Brazil: EO/MEG Girsa, Mexico: EO/MEGPralca, Venezuela: MEGGidesa, Mxico: EG, PSTrikem, Brazil: PSInnova, Brazil: styrene/PSDaaboul, Syria: LABJose Methanol, Venezuela: methanolKuAz, Russia: caprolactamEleme Petrochemicals, Nigeria: PE, PPXinao, China: Coal-to-DMEDCM Shiram, India: PVCHimadri, India: Carbon Pitch, carbon blackGalaxy Chemicals, India: SurfactantsEIPET, Egypt: PET

    Others/InfrastructureFertilizers

    Inorganic Chemicals

    Engro Polymers, PakistanKanoria Vizag, IndiaAtul Ltd, IndiaAlexandria Carbon Black, Egypt: Carbon blackContinental Carbon (CCIL), India: Carbon BlackMaanshan I & II, China: Carbon blackRain Calcining, India: calcined carbonPeroxythai, Thailand: hydrogen peroxideChengdu, China: potassium hydroxide & PVCProdesal, Colombia: caustic soda, chlorineMeghmani Finechem, India: ChlorAlkaliMagadi Soda, Kenya: soda ashLukovac Soda, Bosnia: soda ashKanoria Chemicals, India: ChlorAlkaliJiuda Salt, China: industrial salt

    JPMC Terminal, JordanIFC / SCB FacilityEngro Vopak, Pakistan: Chemical terminalMesser, Trinidad & Tobago: industrial gasesOpet Petrolculuk, Turkey: fuel distributionAntai, China: metallurgical cokeEcogreen I & II, Indonesia: oleochemicalsDarong, China: specialty chemicalsUPL, India: pesticides, herbicidesGapco, Kenya: storage terminalZhong Chen, China: storage terminalGalnaftogaz, Ukraine: petroleum retailerDongyue, China: fluorine chemicals,

    organicsiliconeAtul, India: Dye and pesticide intermediatesHikal, India: PharmaceuticalsVinati Organics (JV), India: specialty chemicals

    5

  • All Economics Is Driven By Politics

    IFC Chemicals 6

    ?

    Political Risk: Far Away Issues Also Impact Us

    Where is France Going?

    ?

    What about

    the Migrants

    Crisis

  • US: Playing Political Games With No Rules

    Presentation Title 7

    The New Normal : Shut the government down and flirt with debt default every 3 months?

    Prospect Prospect Prospect Prospect of of of of prolonged and prolonged and prolonged and prolonged and

    frequent frequent frequent frequent fights fights fights fights on on on on

    Capitol Hill Capitol Hill Capitol Hill Capitol Hill

    The next politicoThe next politicoThe next politicoThe next politico----economic crisis is just a few weeks away !! economic crisis is just a few weeks away !! economic crisis is just a few weeks away !! economic crisis is just a few weeks away !!

  • China: Yuan versus Dollar

    IFC Chemicals 8

    Source: IMF, SEI

    Chin

    a:

    Avera

    ge B

    ase

    Meta

    ls

    Consu

    mpti

    on a

    nd G

    DP p

    er

    Capit

    a

    The Asian Giants: China and Japan

    BOJs twin aims generating inflation and bringing down yields

    may be somewhat contradictory

    Bank of Japan

  • Due to economical & political instability

    Volatility has been Increasing

    IFC Chemicals 9

    Source: IMF

    Chinese Stock Market 2014-15

  • Emerging Markets are driving global growth. All Companies are increasingly focusing on EM.

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    -1

    0

    1

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    6

    Historical and Forecast GDP Growth

    Source: IMF

    -6

    -4

    -2

    0

    2

    4

    6

    8

    10

    20

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    World

    Advanced economies

    Emerging and developing economies

    Economic Insights: We know Emerging Markets

    As a member of the World Bank Group, IFC has unparalleled insights into Emerging Markets.

  • MIGA: Multilateral Investment Guarantee Agency

    Umbrella of deterrence

    MIGAs Shareholders are the same as the Host Countries of investments

    Only a small proportion of MIGA-supported projects encounter difficulties

    MIGA guarantees provide downside protection on long-

    term investments

    Equity covered up to 90%; Debt covered up to 95%

    Tenor covered up to 15-20 years

    11

    Political (Country) Risk Insurance

    Currency

    Transfer

    Restriction and

    Inconvertibility

    Expropriation War and Civil

    Disturbance

    Breach of

    Contract

    Coverage

    Guarantee holder can pick any combinations of coverage

    Non Honoring