Agri09 day iii - session v - part i -anup jagwani - ifc

IFC Agribusiness in AfricaCape Town, RSA – June 2009

Anup Jagwani

Principal Investment Officer

IFC Global Agribusiness Department

EMRC, Cape Town - June 2009 2

Agenda

• Overview

• IFC: Global expertise in agribusiness

• IFC Agribusiness experience in Africa

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

- Risk Management

- Advisory Services

To reduce political

investment risk

Foreign investors in

member countries

- Political Risk Insurance

Est. 1945 Est. 1960 Est. 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

IFC is a Member of the World Bank Group

Shared Mission: To Promote Economic Development and Reduce Poverty


IFC FY08 Highlights

IFC –$84 billion Invested in Emerging Markets since 1956

Largest multilateral source of loan/equity

financing for the emerging markets private

sector

Founded in 1956 with 179 member countries

AAA rated by S&P and Moody’s

Equity, quasi-equity, loans, risk management and

local currency products

Takes market risk with no sovereign guarantees

Promoter of environmental, social, and corporate

governance standards

Resources and know-how of a global

development bank and flexibility of a merchant

bank

Holds equity in over 900 companies worldwide

Portfolio $32.4 billion

Committed $11.4 billion

Syndicated $4.8 billion

# of companies 1,400 +

# of countries 85 +

South Asia

11%

Global

1%

Sub-Saharan

Africa

10%

Europe &

Central Asia

28%

Latin America

25%

Middle East &

N.Africa

11%

East Asia and

the Pacific

14%


IFC’s Global Reach

100+ country and regional advisory services offices worldwide

Drawing on our experience and lessons-learned, we share sector best practices to the benefit of our clients.



IFC in Sub-saharan Africa

IFC Hubs

IFC Country OfficesCape Town

JohannesburgMaputo

Antananarivo

Lusaka

Dar es Saleem

NairobiKigali

Douala

N’Djamena

LagosAccra

Ouagadougou

Abidjan

Dakar

CairoAmman

JerusalemBeirut

Algiers

Rabat

Sana’a

Dubai

Kinshasa

Monrovia

ATLANTIC

OCEAN

Mediterranean

Sea

INDIAN

OCEAN

IFC’s Products and Services

Senior

Debt

Global Trade

Finance Program

Structured

Finance

Mezzanine

Finance

Private

Equity

• On-lending

• Liquidity management

• Acquisition financing

• Warehousing facilities

• Syndicated loans

• Partial credit

guarantees

• Securitization

• Bond underwriting

• Credit

Enhancement

• Convertible debt

• Subordinated debt

• Other Tier II

instruments

• Common shares

• Preferred shares

• $1 billion program

• Guarantees to issuing banks

• 46 issuing banks in 24

countries

• 92 confirming banks in 62

countries

• $579 million of issued

guarantees in first 12 months

Advisory

Services

• Corporate governance

• Risk management

• Small and medium

business banking

• Housing finance

• Energy efficiency finance

Sustainable

Finance

• Carbon finance

• Renewable energy

• Supply chain financing

• Corporate governance


Agenda

• Overview


• IFC Agribusiness experience in

Africa

IFC Value Add in Agribusiness

Equity

Fixed/Floating

Rates, Local

Currencies

Up to 15 year

Loan Maturity

Flexible

Amortization

Profile

Catalyst for

other Investors

and Lenders

Equity

Participation

Capital

Mobilization

40+ Years of

Sector

Expertise

Industry

Specialist

Advice and

Benchmarks

Greenfield

Expansion/

Modernization

Corporate

Strategy

Access to

International

Investors

Government

Relations

Neutral broker

Role

Reduced Risk of

Expropriation,

Breach of

Contract,

Convertibility

World Bank

Synergies

Witholding Tax

Benefit

Advice on

Environmental

and Social Best

Practices

Energy and

Water Use

Management /

Cleaner

Technologies

Equator

Principles

Modeled after

IFC Standards

Local

Consultation

and Disclosure

Local Supplier

Development

Environmental/

Social Advice

Corporate

Governance

Local

Economic

Development

HIV/AIDS

Prevention

Community

Development

Funding

Sustainability

Toolkit

Environmental

& Social Risk

Management

Country Risk

Mitigation

Global Sector

Expertise

Regional

Knowledge

Long-term

Competitive

Financing

Extensive

Local Office

Network

Local

Transaction

Experience

Strong bank

partnerships

through client

networks and

B loan

participants

World Bank

Synergies

Joint Venture

partnership

management

Regional

Knowledge


IFC Investment in the Agribusiness Value Chain Exceeded

US$1.4 Billion in FY 2008 IFC’s Goal:

Deliver development impact along the global agri-supply chain, through investments and advisory services with the private sector,

to create opportunities and improve peoples’ lives

FinancialInstitutions

Market Infrastructure

Farm

ProductionInputs Collection Processing Marketing Distribution

Risk Sharing Facilities

Pre-Harvest Finance Trade Finance

Fertilizers and other Chemicals

Land

Project/Corporate Finance

Retail

Infrastructure/Logistics

CIT – Access to Markets

Note: The aggregated amounts listed next to categories above denote potential IFC investment size, subject to approvals


Agribusiness Committed Portfolio

By Sector

$2.2 Billion Committed Portfolio As Of December, 2008

By Region

Africa7,1%

East Asia15,5%

Mid. East/ N. Africa

1,8%

South America34,8%

Cent. America

7,2%

South Asia7.7%

Cent. & East.

Europe17,7%

S. Europe/ Cent. Asia

8,1%


Animal Processing

20,8%

Beverages9,5%

Grains & Milling7,6%

Dairy Products

4,6%Fruits &

Vegetables5,3%

Veg Fats & Oils14,2%

Sugar15,2%

Other Food13,4%

Other9,5%


Agenda

• Overview


• IFC Agribusiness experience in Africa

IFC Agribusiness – Africa Portfolio

$193 million Committed portfolio

(December 31, 2008)

Africa Portfolio by Sector

13


Fighting the Food Crisis in Africa

14

• Rising food prices may send

100 million people back into

poverty, especially in Africa.

• IFC responds by investing in

African agribusiness. We build

clients' supply and distribution

systems, helping more food

reach more people affordably.

• The focus on Africa is part of a

global IFC agribusiness

portfolio that has tripled in

recent years.


Karsten Farms (Egypt/South Africa)

Development Impact: RSA

Objective: Meet buyer demand for reduced year-round global suppliers of fresh fruit

Approach:

1. Create scale and quality to compete internationally

2. Expand geographic diversity – grapes in Egypt

3. Decrease seasonality of South Africa operation - new products (berries, cherries)

4. Establish fruit trading, logistics and handling – remove outside parties to assure quality

5. Long term financial partner to achieve vision (possible future locations: Brazil, China, Turkey)

IFC Investment:

1. $7.5m corporate loan; $15m project cost

2. Provides political risk mitigation for the company

3. South-South FDI – addressing void in the market

4. Technical assistance: IFC against AIDS program


South Africa

Eastern Africa

* Kenya

* Tanzania

* Uganda

* Mozambique

* Ethiopia

Southeast Asia

* Vietnam

* Laos

* Cambodia

Beverages: Sabco (E. Africa/S.E. Asia)

Development Impact: Eastern Africa

Approach:

1. Build from expertise and profits in South Africa

2. Expand/upgrade operations in East Africa

3. Enter Frontier Countries of SE Asia

4. Roll out Manual Distribution Centers – “MDCs” – distribution linkages of local SME providers

IFC Investments:

1.(2002) $37 million in loan, equity, and guarantee

2.(2006) $70 million loans ($40 & $30 m tranches)

3. Provide long-term financing not available in markets

4. South-South FDI – regional company to global


Rubber sector: Salala Rubber (Liberia)

•$29m project to rehabilitate plantation dilapidated during the civil war.

•Increase productivity gains by new plantings and renovation of processing plant,

•Rehabilitate social infrastructure (housing, schools, clinics)

•$10m A loan

• Provide loan with long tenor appropriate for plantation cycle and not available in post conflict environment

• Political and country risk cover

• Implement environmental and social policies and guidelines

• Long term partnership with SocFin, one of the shareholders


Palm Oil sector: GOPDC (Ghana)

IFC Role

• Provide long-term loans not available in local market

• Develop long-term partnership with an emerging regional player

• Institute environmental and social best practices and guidelines

The Project

• $12.5 m to ensure reliable supply of FFB through new plantings and replanting

• Improve competiveness by diversifying into value-added refined oil and improve financial structure

• Financing: $12.5 m 9-yr A loan


Logistics: Bakhresa (Mozambique-Tanzania-Malawi)

• Long-term financing with tenors not available locally

• Provide working capital needs following increase in wheat prices

• Financial transparency

• Technical assistance: corporate governance and HIV/AIDS

The Project

•$33.4m project with the Bakhresa Group, a leading Tanzania-based wheat miller.

•Create grain handling port and storage facility in Mozambique

•$20m investment package for three operating entities in Mozambique, Tanzania and Malawi


Horticulture sector: Kongoni (Kenya)

IFC Role

• Provide long-term loan and advice to emerging regional player

• Technical advice for water management

• Institute environmental and social best practices and guidelines

• HIV/AIDS program support

The Project

•2 phase project to build greenhouses.

•Expansion to enable geographic and product

diversity.

•US$2.0 m A loan


What IFC is Typically Looking for in Projects

•Strong and experienced sponsors

•Viable business plan that is fundamentally sound and

does not rely on subsidies

•Debt to Equity Ratio of 1:1 (though it varies by project)

•Aggregate IFC lending amount of not less than US$5-

10 million (this varies by country)

•Willingness of company to work with IFC on acceptable

E&S standards, financial reporting and good

governance.

So How Does IFC Support SMEs?

•Providing long term capital to the

financial sector for on-lending to SMEs

•Risk Sharing Facilities

•Structured Finance

•Private Equity Funds

•Advisory Services

23

Contact info:

Anup Jagwani

Principal Investment Officer

IFC Agribusiness Department

[email protected]

+1-202-458-7901

Thank You

Documents

Agri09 day iii - session v - part i -anup jagwani - ifc