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IFC Agribusiness DepartmentDr. R. John Hatton
Senior Industry Specialist, IFC Agribusiness Department
OIE Conference, CairoOctober 2008
IFC Work to Support Implementation of Animal Welfare Standards
• IFC - An Overview
• IFC in the Agribusiness Sector
• IFC Livestock Investment Approach including Animal Welfare Standards
• Discussion
OIE Conference- October 2008 2
IFC – An Overview
IFC is a Member of the World Bank Group
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. 1956
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
Shared Mission: To Promote Economic Development and Reduce Poverty
Est. 1945 Est. 1960 Est. 1988
OIE Conference- October 2008 4
IFC’s Global Reach100+ country and regional advisory services offices worldwide
Hong Kong
Rio de Janeiro
IstanbulNew Delhi
Johannesburg
Washington
Moscow
Cairo
IFCHubsIFCOffices
Drawing on our experience and lessons-learned, we share sector best practices to the benefit of our clients.
OIE Conference- October 2008 5
IFC’s Products and ServicesSeniorDebt
StructuredFinance
MezzanineFinance
• Partial credit guarantees
• Securitization
• Bond underwriting
• Credit Enhancement
• Convertible debt
• Subordinated debt
• Other Tier II instruments
PrivateEquity
• Common shares
• Preferred shares
• On-lending
• Liquidity management
• Acquisition financing
• Warehousing facilities
• Syndicated loans
Global TradeFinance Program
• $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
SustainableFinance
• Carbon finance
• Renewable energy
• Supply chain financing
• Corporate governance
AdvisoryServices
• Corporate governance
• Risk management
• Small and medium business banking
• Housing finance
• Energy efficiency finance
OIE Conference- October 2008 6
IFC in the Agribusiness Sector
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
Long-term Competitive Financing
40+ Years of Sector Expertise
Industry Specialist Advice and Benchmarks
Greenfield
Expansion/Modernization
Corporate Strategy
Access to International Investors
Global Sector Expertise
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
Regional Knowledge
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
OIE Conference- October 2008 8
Recent experience in livestock sectors
Pigs/PorkPigs/PorkPoultryPoultry Combination Livestock
Combination Livestock CattleCattle
$160 million
Suguna (India)Contract local suppliers with branded live bird sales kiosks
Wadi (Egypt)Breeding operations
Mironovsky (Ukraine)Broiler production, chilled distribution and retail operations
Halim (Korea)Largest fully integrated broiler producer in Korea
Stavropolskyi Broiler (Russia)Integrated production
$175 million $90 million$61 million
S. EuropeEstablish PS farms, feedmill, contract growing
Agrokor (Croatia)Rehabilitated pig and cattle farms post-privatization to ensure quality local meat supply
Zhengye-ADC (China)Introduce PS and GP stock of PIC pigs and develop local supply chain of breeders
Bertin (Brazil)Introduce sustainability and traceability best practices to Brazil’s leading beef and leather exporter
BGK (Russia)Double pig and poultry production, including expansion of feed mill operations
Banvit (Turkey)Double broiler raising operation; integrate beef raising
Pronaca (Ecuador)Pig slaughtering operation integration with broiler raising
Sadia & Perdigão(Brazil)Repeat debt & equity investments
OIE Conference- October 2008 9
Agribusiness Committed Portfolio
By Sector$2.2 Billion Committed Portfolio As Of June 30, 2008
By Region
Beverages10.2%
Sugar15.8%
Other8.6%
Other Food14.2%
Fruits & Vegetables
6.1%
Dairy Products
4.3%
Grains & Milling7.4%
Veg Fats & Oils
13.1%
Animal Processing
20.4%
S.Europe/ Cent. Asia
9.6%
Africa5.9%
South Asia6.5%
Mid. East/ N. Africa
1.9%
South America37.7%
Cent. America
6.7%
East Asia16.4%
Cent. & East.
Europe15.6%
OIE Conference- October 2008 10
OIE Conference- October 2008 11
Global Expertise: Sample of clients
Clients benefit from access to global expertiseand IFC network of clients
Turkey
Indonesia
South Africa
Peru
BrazilArgentina
Ecuador
India
Russia
Uruguay
China
Nicaragua
Ukraine
Egypt
Ghana
Mozambique
In PortfolioIn PipelinePast Client
IFC Livestock Investment Approach including Animal
Welfare Standards
Pre-Appraisal
(Early Review)
• Client needs determined
• Assessment of project’s impacts and development contributions
• Policy Committee approval
• Mandate letter
Disclosure and Decision Making
• Disclosure of environmental and social information
• Opportunity for public comment
Monitoring IFC’s Project CycleApproval
and Disbursement
• Negotiation and agreement of principal terms
• Board approval
• Signing of legal documents
• Disbursement
Appraisal
(Due Diligence)
• Assessment of business opportunities and risks
• Analysis of environmental and social opportunities and risks
• Appraisal
• Credit Committee approval
Supervision
(Monitoring)
• Annual review of project performance
• Financial
• Environment & Social Report
• Ongoing reviews including possible site visits and technical guidance
We Agree on a Specific Timeline to Meet Client’s NeedsOIE Conference- October 2008 13
Pre-Appraisal: RSPCA’s 5 Freedoms
Freedom…• From hunger or thirst• From discomfort• From pain, injury or disease• To express normal behavior• From fear and distress
OIE Conference- October 2008 14
VEGAN System for Appraisal
ValuationEnvironmentGeneticsAnimal HealthNutrition
V -E -G -A -N -
OIE Conference- October 2008 15
MEGAN System for Appraisal
ManagementM -
OIE Conference- October 2008 16
MEGAN System for Appraisal
ManagementEnvironment
M -E -
OIE Conference- October 2008 17
MEGAN System for Appraisal
ManagementEnvironmentGenetics
M -E -G -
OIE Conference- October 2008 18
MEGAN System for Appraisal
ManagementEnvironmentGeneticsAnimal Health
M -E -G -A -
OIE Conference- October 2008 19
MEGAN System for Appraisal
ManagementEnvironmentGeneticsAnimal HealthNutrition
M -E -G -A -N -
OIE Conference- October 2008 20
Discussion
OIE Conference- October 2008 21
Thank You
Dr. R. John HattonSenior Industry Specialist,
IFC Agribusiness [email protected]
OIE Conference- October 2008 22