Multidimensional Risk ManagementA Tool for Building Sustainable Projects?
Jan P. Mumenthaler
Head, Insurance Services Group
International Finance Corporation
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 182 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
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IFC FY10 Highlights
Over $90 billion Invested in Emerging Markets since 1956
S&P, Moody’s AAAPortfolio $48.8 billionCommitted $16.1 billionSyndicated $1.9 billion# of companies1,656# of countries103# of companies with equity 668
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Our Value Added
IFC’s Products
Industry knowledge
Relationship with / understanding of local authorities
Expertise inemerging markets
Capital Mobilization
• B loan program
• Credit enhancement (Partial Credit Guarantee)
• Pre-IPO stamp of approval
Capital Mobilization
• B loan program
• Credit enhancement (Partial Credit Guarantee)
• Pre-IPO stamp of approval
Long Term Financing
•Corporate / Project / Acquisition
• Foreign / Local currencies
• Equity / Quasi-equity
• Carbon Finance
Long Term Financing
•Corporate / Project / Acquisition
• Foreign / Local currencies
• Equity / Quasi-equity
• Carbon Finance
Advisory ServicesAdvisory Services
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Selected Power Transactions ……
$130,000,000Loan Financing
Uganda
LenderJune 2007
Bujagali Energy
$125,000,000Loan Project Financing
Pakistan
LenderMarch 2007
KESC
$450,000,000Equity and Loan Financing
India
Shareholder and LenderApril 2008
Tata Ultra Mega
$262,126,000Equity and Loan Financing
Philippines
Shareholder and LenderFebruary 2008
Masinloc Power
$62,500,000Loan Financing
Brazil
Mandated LeadArrangerFebruary 2006
TermoFortaleza
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… and in Oil & Gas
Cairn Energy
$171,000,000Revolving Credit Facility & Equity Investment
Equity Investor & Mandated Lead ArrangerJune 2006
India
Bankers Petroleum
$40,400,000Senior Loan & Quasi Equity
Lender and Investor2009
Albania
Tullow Oil
$115,000,000Senior Loan
Sole LenderMay 2009
Ghana
Pan American Energy
$550,000,000Syndicated Corporate Loan
Mandated Lead ArrangerJune 2007
Argentina
Peru LNG
$300,000,000Syndicated Project Financing
LenderJune 2007
Peru
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Multidimensional Risk Management
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CSR – How to Move Beyond …
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Transforming Responsibility into Opportunity
Challenges- Not well integrated in models (financial/operational)
- No assessment of financial value
- Difficult to communicate value
Solution through Tool
- Estimates expected net present values
- Evidence-based customization+ “plug-and-play” usability
- Framework for prioritizing, structuring, timing and resourcing investments
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Key Sustainability Risks
- Delays in planning phase- Delays in construction phase- Disruptions in operational phase- Project cancellation or expropriation- Added cost + litigation
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Tool Objectives
• Calculate sustainability investment value- Direct value creation- Indirect value protection
• Strategic framework for decisions
• Stronger Risk Management framework reduced cost of risk
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Understanding your Risk=making the right choices
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Environmental & Social Risk Management IFC’s Approach
• Sustainability Framework- Sustainability Policy- 8 Performance Standards
• PS1 Social and Environmental Assessment and Management System
• PS2 Labor and Working Conditions• PS3 Pollution Prevention and Abatement• PS4 Community Health, Safety and
Security• PS5 Land Acquisition and Involuntary
Resettlement• PS6 Biodiversity Conservation and
Sustainable Natural Resource Management
• PS7 Indigenous Peoples• PS8 Cultural Heritage
• Equator Principles (www.equator-principles.com)
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IFC’s Performance Standards:International Stamp of Approval
“Equator Principles” adopted by 60+ of the world’s leadingbanks and based on IFC’s Performance Standards
Apply to 85% of project financing worldwide
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What does this mean for the Insurer?
• Sustainable project
• Client with Risk Management understanding
• Improved performance- Monitored environmental performance- Fire & Life Safety focus- Social license to operate
• Operating in line with best practice
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Thank you for your Interest
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