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September, 2007 Skopje, Macedonia International Finance Corporation (IFC) Global Information &...
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Transcript of September, 2007 Skopje, Macedonia International Finance Corporation (IFC) Global Information &...
September, 2007Skopje, Macedonia
International Finance Corporation (IFC)
Global Information & Communication Technologies Practice
IFC’s fundamental role is to promote economic development by encouraging private investment, both foreign and domestic, in developing member countries
IFC participates in private ventures that benefit the host country economy, promote high environmental standards, and provide strong demonstration effect
World Bank Group
International FinanceCorporation (IFC)
Multilateral Investment Guarantee
Agency (MIGA)
International Development
Association (IDA)
International Bank for Reconstruction and
Development (IBRD)
Promote sustainable private sector investment in emerging markets
International Finance Corporation
• AAA rated member of the World Bank Group which is owned by 179 countries
• Major source of IFC’s borrowings is the international markets, $1.8 bn in FY06
• FY06 commitments: $6.7 bn in 284 projects • Authorized capital: $2.5 bn• FY06 Net Worth: $11.1 bn• FY06 Net income: $1.3 bn
Between 1956 and 2006, approximately $56 bn of own funds invested in 3,531 companies in 140 developing countries -
Additional $25 bn mobilized from other investors
Global1%
Sub-Saharan Africa
9%
Europe & Central Asia
31%
Latin America29%
Middle East & N.Africa
7%
East & South Asia23%
$21.6 bn committed portfolio at end of FY 2006$21.6 bn committed portfolio at end of FY 2006
Notes: Data as of July 2005
International Finance Corporation
• Albania• Azerbaijan• Bosnia and Herzegovina• Bulgaria• Croatia• Kazakhstan• Kyrgyz Republic• Macedonia• Moldova• Montenegro• Romania• Serbia• Tajikistan• Turkey• Turkmenistan• Uzbekistan
IFC’s Southern Europe & Central Asia (SECA) Region
IFC’s annual investments in the SECA region have reached a billion USD in FY 2007:
Investments in SECA in USD million:
Turkey is IFC’s 5th largest country exposure with a $1.27 bn portfolio as of August 31, 2007
The Hub Office for the SECA region is located in Istanbul, Turkey, with representative offices in other countries
Southern Europe & Central Asia Region
FY 2003 FY 2004 FY 2005 FY 2006 FY 2007587 842 811 997 1,029
IFC in Information & Communication Technologies
IFC is the largest multilateral financier of Information and Communication Technologies projects in emerging markets.
• First telecoms investment in 1969.
• Nearly US$5.1 billion in financing commitments for 125 investments in 45 countries by the end of FY 2006
• Current outstanding portfolio in ICT totals US$1.4 billion.
• Close relationships with many key players in the industry (regulators, operators and equipment suppliers).
• One of the best-performing sectors within the World Bank Group, both in terms of financial returns and development impact
Distribution of IFC’s Actual ICT Portfolio
By Regions
East Asia12%
South Asia7%
Eastern Europe
11%
SECA16%
LAC33%
MENA11%
Africa9%
Global1%
Fixed telephony
28%
Mobile telephony
50%
Media & Satellite
2%Cable &
Broadband14%
IT6%
By Segments
IFC’s Products and Services
IFC’s Products
Industry knowledge &
contacts
Sensitivity toGovernment
priorities
Commercial &technical skills inemerging markets
Capital Mobilization• Commercial bank lending -
exempt from withholding tax & provisioning requirements
Capital Mobilization• Commercial bank lending -
exempt from withholding tax & provisioning requirements
Long Term Financing• Corporate / project financing
• Equity / Quasi-equity
Long Term Financing• Corporate / project financing
• Equity / Quasi-equity
Advisory Services• Country, industry, financial
and technical advise
Advisory Services• Country, industry, financial
and technical advise
GICT: A Value Added Partner
• Global perspective on ICT Advice based on intimate understanding of global technology trends & best practices Global presence & network permits borderless engagement Leading emerging market investor in the telecom and IT industry
• Long-term financing partner Invest across company lifecycle – early, mid and late stage Array of financial products – equity, quasi-equity, debt, guarantees, cross border
financing Funds mobilization through international network of financial institutions & capital
markets
• Extensive World Bank & IFC network Established presence in over 75 emerging market countries Long-standing relationships with governments & companies across member countries
• World Bank & IFC credibility & stature Track record in emerging & frontier markets reassures foreign investors & host
countries Recognized emerging market leader in corporate governance & sustainable
development
Investment Philosophy • Telecom / Media:
– Private sector management & majority ownership– Some sponsor requirements (transparency, reputation)
• IT: – “Stage independent investor” – early, mid & late stage– Various instruments - Common & Preferred Equity, Quasi
equity, e.g. Convertible Loans, Loans with Warrants, Mezzanine financing
– Minority equity positions: 5% to 20%– Board participation (observer role only)– Investment focus: IT Services, IT Enabled Services,
Software Development, e-Commerce, e-Government– Provides introductions to strategic partners– Follow-on financings available
IFC’s Investment Criteria
• Similar to commercial banking requirements, plus:
– Global Emerging Markets focus
– Private sector management and majority ownership
– Selectivity of sponsors, especially regarding transparency and reputation
– Investment limited to 25% of total project cost (50% for expansions), but no more than 25% of total capitalization of the company.
– Demonstrable development impact:
o Positive economic return.
o Social and environmental impacts mitigated.
• Typical deal size:
- Telecom / Media: US$15-100 million
- Information Technology: US$ 2-20 + million
ICT Projects of IFC in Southern & Eastern Europe
• Turkey - Meteksan (IT): US$8.5 million term loan to Meteksan to refinance short-term debt and support expansion plans and working capital requirements
• Russia - IBS (IT): US$8 million convertible loan to IBS to support financial restructuring and expansion plans
• Romania – Orange (Mobile): US$215 million syndicated term loan to Orange Romania
• Moldova – Voxtel (Mobile): US$35 million syndicated term loan and Equity to France Telecom’s subsidiary in Moldova
• Albania – Vodafone (Mobile): US$41.5 million term loan to Vodafone Albania
• Macedonia - Maktel (Fixed and Mobile): US$30 million syndicated term loan and equity investment to Matav’s subsidiary
• Hungary – Matav (Fixed and mobile): US$100 million pre- and post privatization term loan and equity investment
• Russia – Sonic Duo (Mobile): US$30 million syndicated term loan and mezzanine investment
INDIA
Indecomm US$ 2,600,000 Equity
Co-Investor Early Stage Financing
INDIA
Spryance US$ 2,000,000 Equity
Lead Investor Start-Up Financing
INDONESIA
PT Sigma US$ 3,000,000 Equity
Co-Investor Expansion Capital
PAKISTAN
TRG Pakistan US$ 7,500,000 Equity
Lead Investor Expansion Capital
THE PHILIPPINES
Software Ventures International US$ 2,000,000 Equity
Lead Investor Expansion Capital
GLOBAL
Novica US$ 3,000,000 Equity
Investor Early Stage Financing
RUSSIA
ru-Net Holdings US$ 5,000,000 Senior Debt & Quasi-Equity
I nvestor Expansion Capital
RUSSIA
Egar Technology US$ 1,500,000 Equity
Lead Investor Expansion Capital
EGYPT
IT Worx US$ 2,500,000 Equity
Lead Investor Expansion Capital
CHINA
GDS China US$ 5,000,000 Equity
Investor Expansion Capital
WORLD
MPN US$ 1,300,000 Equity
Investor Expansion Capital
INDIA
FINO US$ 5,000,000 Equity & Quasi-Equity
Founding Investor Start-up Capital
Internal to IFC
Supervision
As Seen By Client
Management Approval
Board Approval
Initial Discussions
Mandate LetterAppraisal
Financing Negotiations
Info. Memo & SyndicationLegal Documentation
Disbursement
Initial Review & Authorization to Appraise
20
IFC’s Investment Process
Let’s Discuss Further – We are there to Work with You
Marko CuravićInvestment Officer
Southern Europe & Central Asia Region
Istanbul OfficeTel: +90 212 385 3000Fax: +90 212 385 3001
Email: [email protected]: http://www.ifc.org
ANNEX: Examples of IFC’s Transactions
Russia: IBS (Information Business Systems)
• In 2002, IFC provided US$8 million convertible loan to IBS to support financial restructuring and expansion plans
• IBS is largest IT group in Russia Operates largest offshore software development company in Russia under brand
Luxoft
Largest IT distributor & systems integrator in Russia
Developing own computer brand and direct distribution model in Russia
• IFC’s investment : Increased availability of IT products & services in market
Offered innovative convertible debt structure with longer tenor than available in market
Advised IBS in building executive team & benchmarking performance v. global IT service leaders in India and elsewhere
IBS has grown more than 4x since investment
IBS has become the leading employer of high end IT professionals in Russia
Sent positive message to investors about attractive opportunities Russia’s IT sector
IBS has become a vocal leader advocating regulatory reform in Russia
GICT Flagship Transactions
India: DQ Entertainment
• In 2003, IFC invested $3 million in DQ Entertainment, leading animation services company
Provides outsourced & proprietary 2D/3D animation & multimedia services Clients include Disney, Warner Brothers, Universal, Il Grupo Alcuni
• IFC’s investment & presence : Helped take DQ Entertainment’s operations to next level through addition of
latest CGI/3D animation facilities Early mover and catalyst for India’s animation industry, which requires highly
skilled & creative professionals Part of IFC’s strategy to help innovative Indian companies expand into global
markets, creating export earnings & employment Assisted DQ in raising next round of financing within 12 months at substantial
premium
GICT Flagship Transactions
Russia: TV3
• In April 2004, IFC invested $7.0 million in parent company of TV3 Russia
Existing shareholders provided $5.0 million
TV3 will expand distribution capabilities & broadcast infrastructure
Plans to enhance program offering with wider range of family-oriented entertainment content
TV3 Russia - rapidly growing independent terrestrial television broadcaster reaching nearly 45 million people
• IFC’s involvement contributes to: Development of independent private media in Russia
Stimulates business growth in advertising & broadcasting industries
Supports development of Russia’s telecom sector
GICT Flagship Transactions