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Supporting Private Health Care in Emerging Markets
January 2011
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International Finance Corporation at a glance
History, ownership and vision• Founded in 1956 to foster private sector
investment in the developing world• Part of the World Bank Group and owned by
its 179 member countries• Vision: That poor people have the opportunity
to escape poverty and to improve their lives.
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2003 2004 2005 2006 2007 2008 2009 2010
US$
billion
s
IFC's own account* Syndications
IFC Financing as of June 30, 2010Total Commitments: US$12.7 billion for own account, US$5.4 billion mobilized
*Includes loans, equity, guarantees, risk management products
Infrastructure 16%Global Manufacturingand Services 17%
Subnational Finance 2%
Private Equity and Investment Funds 5%
Health and Education 3%
Global Financial Markets Group 37%
Oil, Gas, Mining, andChemicals 9%
Agribusiness 6%
Global ICT 4%
IFC Portfolio as of June 30, 2010, by Industry
Total US$38.9 Billion
IFC Portfolio as of June 30, 2010, by Region
Total US$38.9 Billion
Middle East and North Africa 11%
Europe and Central Asia 25%
East Asia and the Pacific 14%
Sub-Saharan Africa 13%
South Asia 11%
Global 1%
Latin America and the Caribbean 25%
IFC FY10 Annual Report data
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IFC Investment Strategy: 3 Fundamental Principles
• Commercially viable investments ― Market based― Must produce returns
• Value added beyond capital― Opportunity to help clients achieve higher standards of
management and social responsibility
• Strong development impact― Support projects that will expand much needed services
in a socially and environmentally responsible way
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IFC has a well established franchise inEurope & Central Asia
Historical CommitmentsUS$ millions
Fiscal Year 2010 CommitmentsUS$ millions
LoansUS$ 1,807
SyndicationsUS$387
Guarantees US$539
Equity US$624
US$ 3,357 million
IFC Portfolio by Country (largest exposure)US$ millions
Turkey US$2,032
Russia US$2,286
US$ 12,278 million
UkraineUS$880
Total Committed Portfolio US$12,278
Committed portfolio for IFC’s account US$9,691
Committed portfolio held for others(loan and guarantee participants)
US$2,587
Regional PortfolioUS$ millions
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FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
IFC syndications IFC loans, equity, guarantees, risk mgt.
IFC FY10 Annual Report data
Health and Education Sectors are corporate priorities and pillars of IFC’s Strategy
FY 2010: committed $429mil in 17 projects
IFC Health and Education at a glance
Health Sector:Health Sector:97 private health projects in 36 countries
US$ 4.8bil of total project value
US$ 1.2bil of CHE total investments
Education Sector:Education Sector: 67 private education projects in 34 countries
US$ 1.5bil of total project value
US$ 505mil of CHE total investments
INVESTMENT TRACK RECORDINVESTMENT TRACK RECORD
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Objective: Support Growth of Sustainable Health Care Companies
To achieve this objective we
• Provide financial advice and innovative financing to private and sub national healthcare and education companies
• Use our global industry expertise to advise companies and shape projects and maximize chances of success
• Promote best practices and set industry standards• Build credibility of clients in early development stages • Support expansion of our clients to other countries/ regions• Mobilize other private sector investors• Support IFC’s advisory department in their privatization / PPP advisory work• Work with the WB to help countries improve regulatory environment for
provision of education and healthcare
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IFC has partnered with leading health companies
MedLife
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MedLife, Romania
Sponsor: MedLife, a provider of a range of medical services through a network of 12 outpatient clinics and 3 laboratories in Bucharest
Project: Construction of (i) a 100-bed hospital in Bucharest, and (ii) 5 40-bed hospitals in smaller cities in Romania
Project Cost: US$24.8 million
IFC Support: • IFC provided a US$5 million senior loan and $5 million
equity• IFC provided advice on corporate governance
Result• MedLife entered the hospital business with completion
of a hospital in Bucharest in July 2007• IFC’s investment raised profile of MedLife in local
financial market
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Euromedic, Eastern Europe
Sponsor: Euromedic, a leading provider of diagnostic imaging and hemodialysis services throughout Southern, Central and Eastern Europe (Hungary, Poland, Romania & Bosnia).
Project: Project 1: Expansion of diagnostic imaging network in Hungary and establishment of diagnostic and hemodialysis network in Poland. Project 2: Expansion of the network in Poland, Hungary, Romania and Bosnia. Establishment of new networks in region including Croatia.
Project Cost: Project 1: $37 million, Project 2: $26 million
IFC Support:
• IFC provided € 24.4 million in senior loans
Result:
• IFC provided Euromedic funding not available to it in Eastern Europe
• Euromedic’s 21 diagnostic centers increased access to high quality private healthcare for local population
• Euromedic was able to integrate its services in the public healthcare system
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Hospital Metropolitano S.A., Nicaragua
Sponsor: The Pellas Group, one of the largest conglomerates in Central America with diversified presence in various industries.
Project: Expansion with new 32-bed hospital building; construction of an oncology center and 67 new medical offices building; refinancing of existing bank debt
Project Cost: US$25.9 million
IFC Support: • Provided US$10 million senior secured A loan and US$1 million
income participating C loan
Results:• Access to local high quality healthcare in Nicaragua • Construction of the first integrated oncology center in Nicaragua • Continuous efforts to expand health services to lower income markets• Creation of center of excellence for the country and region
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IFC’s expert teams work closely with the client
• Identify project• Analyze and
discuss with company business plan and sources and uses of funds
• Obtain management approval to formally consider investment
• In-depth business review
• Senior management interview and site visit
• Obtain approval to negotiate final transaction terms
• Negotiate final investment terms
• IFC lawyers initiate draft investment documents
• Final approval• Sign legal
documents• Disbursement
• IFC monitors the project closely
• Consults periodically with project managers
• Field missions to enterprise
• Requires progress reports, annual audited statements, and other material information
2 – 4 weeks 2 – 4 weeks 1 – 2 weeks 3 – 5 weeks 4 weeks As appropriate
SupervisionBoard
Approval
Negotiation &
Documentation
Investment Review Meeting
AppraisalIdentification &
Review
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• Up to 12 years final maturity and 2 to 3 years grace period for principal on average• Security package typical: physical assets, pledge of shares, leases, etc.• Market based pricing• Available in fixed / floating and, depending on market conditions, local or USD currency
• IFC syndicates portions of loans in order to mobilize additional financing partners• Commercial banks take comfort in IFC due diligence and structuring experience• Over 150 commercial banks and other institutions currently participate in IFC’s B loan program
• Hybrid featuring characteristics of both debt and equity– Subordinated, convertible, income participation, bullet repayment and others
• Typically in the form of common or preferred stock• Denominated in local currency
• Securitizations: asset-backed securities, including future revenues, receivables, etc.• Guarantees: partial credit guarantees enhancing credit worthiness of client's financing• Risk-sharing facilities: allowing for alternative risk allocation
• IFC provides technical assistance / advisory services in support of its clients• Country and sector specific• Funded by donor governments and other multilateral institutions
CHE has full range of financing capabilities
Senior Loan
B Loan / Syndication
Mezzanine
Equity
StructuredProducts
Advisory Services
Health and Education Portfolio at a glance
Health portfolio: Health portfolio: 54 active projects
$866 mm committedEducation portfolio: Education portfolio: 32 active projects
$345 mm committed
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Acibadem, Turkey
Sponsor: Acibadem Healthcare Group, a leading private healthcare provider in Istanbul, Turkey. The Group owned and operated 2 full service hospitals, 3 outpatient clinics, 1 ophthalmology clinic and 1 central laboratory
Project: Project 1: Construction of an 80-bed oncology / neurosurgery hospital in Istanbul and a 200-bed general hospital in Bursa. Project 2: Expansion of networks in Istanbul, Izmir and Ankara.
Project Cost: Project 1: US$62 million, Project 2: US$113 million
IFC Support: • IFC provided US$60 million long-term debt
Result
• Acibadem was able to undertake a significant expansion in healthcare provision (by 378 beds) and, at the same time, demonstrate the credibility of the private health sector in Turkey
• Acibadem was successful in becoming the 3rd hospital in Turkey to receive JCI accreditation