Debt & Equity Mobilization: From Billions to Trillions

DEBT & EQUITY MOBILIZATION
- FROM BILLIONS TO TRILLIONS
Washington DC
December 12, 2017
Meaghan McGrath
Sarah O’Sullivan
Panel Firm Workshop 2017

WHY MOBILIZATION?
“Catalyzing and mobilizing other sources of finance for
private enterprise development” is a key part of IFC’s
Strategy 3.0
 IFC does not have unlimited capital
 To grow IFC activities more rapidly than our own capital
 Management refers to IFC volumes including mobilization
 Additional fee income without usage of capital
Overview
2

IFC’S SYNDICATED LENDING PROGRAM
 Oldest and largest syndicated lending program among multilateral
development banks, established in 1957
 Over US$50 billion mobilized from more than 500 financial
institutions for over 1,000 projects in more than 110 emerging
markets
 Co-financiers include international commercial banks, local and
regional banks in emerging markets, funds, insurance companies,
development finance institutions (DFIs) & an emerging market
central bank
 As of June 30, 2017, IFC’s syndicated loan portfolio under
management totaled US$16 billion
IFC SyndicationsB LoansB LoansB LoansB LoansDebt Mobilization - Overview
3

FY17 LONG-TERM INVESTMENT COMMITMENTS:
$19.3 BILLION
IFC SyndicationsB LoansB LoansB LoansB LoansDebt Mobilization - Overview
4
11.0
10.0 10.6 11.1
11.9
6.5
5.1
7.1
7.7 7.4
0
5
10
15
20
25
FY13 FY14 FY15 FY16 FY17
IFC's Own Account Mobilization
$17.5 bn
$15.1 bn
$17.7 bn
$18.8 bn $19.3 bn

STATISTICS – GLOBAL
Fiscal year-end is June 30
FY2015 FY2016 FY2017
B
Loans
Parallel
MCPP
Loans
B
Loans
Parallel
MCPP
Loans
B
Loans
Parallel
MCPP
Loans
Volume (US$m): 1,853 1,522 818 3,670 1,204 541 1,610 1,509 356
Number of Deals: 36 16 23 36 21 17 32 27 9
Average Loan Size
(US$m):
52 94 36 102 57 32 50 56 40
Average Final Maturity
(yrs):
9 14 - 8 10 - 6 10 -
Average Margin (bps): 355 462 - 450 422 - 395 500 -
B LoansB LoansB LoansB LoansDebt Mobilization - Overview
5

B LoansB LoansB LoansB LoansDebt Mobilization - Overview
6
 B Loans
 Parallel Loans
 Managed Co-Lending Portfolio Program
DEBT MOBILIZATION: Key Products

Borrower
Participants
Loan Agreement
A + B Loans
Participation
Agreement
B Loan  One loan agreement – IFC is lender of
record and administers entire loan
 IFC fully shares project risks with
participants
 Participation structure allows
participants to benefit from IFC’s
privileges and immunities
B LOAN STRUCTURE
B LoansB LoansDebt Mobilization - B Loans
7

PARTICIPANT ELIGIBILITY
 Objective participant eligibility criteria
 “Eligible Financial Institution”
 Not incorporated or residing in the country of the borrower
or the project
 Not an export credit, governmental, or multilateral agency
 International investment-grade rating from Fitch, Moody’s or
S&P
 Non-investment grade and unrated financial institutions may be
considered on a case-by-case basis
8

 Enables loans with longer tenors & no withholding tax*
 Completes financial package
 Introduces new banking relationships
 IFC’s “stamp of approval”
 IFC’s environmental and social leadership
BENEFITS TO BORROWERS
9

US$ ‘000
TOP 20 PARTICIPANTS
US$ ‘000
New Signings
July 1, 2016 – June 30, 2017
Committed Portfolio
as of June 30, 2017
B LoansB Loans
1 SANTANDER 257,000 1 SANTANDER 699,617
2 APOLLO 147,210 2 FMO 656,622
3 INDUSTRIAL AND COMMERCIAL BANK OF CHINA 145,000 3 INDUSTRIAL AND COMMERCIAL BANK OF CHINA 475,000
4 ITAU 121,500 4 SUMITOMO MITSUI FINANCIAL GROUP 474,796
5 FMO 118,200 5 CREDIT AGRICOLE 341,681
6 ANZ 100,000 6 UNICREDIT 335,737
7 RABOBANK 97,500 7 ING 314,296
8 RESPONSABILITY INVESTMENTS 68,975 8 DNB ASA 283,118
9 ABN AMRO 64,500 9 ANZ 261,750
10 CLIFFORD CAPITAL 62,000 10 HSBC 260,715
11 CATHAY UNITED BANK COMPANY LIMITED 50,000 11 KFW-IPEX 250,171
11 CITI 50,000 12 KOREA DEVELOPMENT BANK 249,463
13 STANDARD CHARTERED 45,000 13 ITAU 245,722
14 HSBC 40,000 14 COMMERZBANK 231,841
15 ING 37,500 15 BANK OF CHINA 231,000
16 FIRST ABU DHABI BANK 30,000 16 RABOBANK 211,783
17 COMMERZBANK 24,200 17 NORDEA BANK 207,462
18 EMERGING AFRICA INFRASTRUCTURE FUND 24,150 18 ARAB BANK GROUP 201,745
19 FIRSTRAND BANK 21,000 19 SOCIETE GENERALE 191,892
20 ARAB BANK GROUP 20,000 20 MITSUBISHI UFJ FINANCIAL GROUP 184,596
Debt Mobilization - B Loans
10

 Preferred Creditor Status (PCS)
 Recognition of IFC’s risk mitigation by
 Regulators
 Rating agencies
 Basel II
 Private PRI providers
 IFC’s environmental and social leadership
 IFC’s structuring and restructuring skills
BENEFITS TO PARTICIPANTS
11

 100%: Change in money terms
 100%: Waive or amend conditions precedent
 67%: Acceleration following payment default
 67%: Release security or waive negative pledge
 67%: Waive or amend guarantees or support arrangements
 51%: Change in ownership control provision
 51%: Waive or amend financial covenants
 Consult: Waive or amend non-financial covenants
PARTICIPANT’S VOTING RIGHTS
12
(Percentages reflect consent level required, based on total B Loan amount)

IFC shares with Participants all information received from Borrowers
under the Loan Agreement, including regular financial reporting &
knowledge of key credit events
INFORMATION SHARING
Debt Mobilization - B Loans
13

IFC AND RISK MITIGATION
Credit RiskCountry Risk Reputational Risk
 First-class due diligence
and analysis
 IFC’s global presence and
knowledge
 IFC’s structuring and
restructuring skills
 Strong security packages
 Long-term funding,
avoiding refinancing risks
 IFC’s Environmental &
Social Standards
 Extensive governance
due diligence
 World-class in-house
specialists
 IFC’s Preferred Creditor
Status
 IFC’s effective mitigation of
transfer and convertibility
risk
 IFC access / relationships
to national governments
14

SYNDICATED PARALLEL LOANS
 Partnership with financial institutions which are not eligible B Loan
participants such as Development Financial Institutions (“DFIs”) or
local commercial banks
 To improve cooperation with DFIs, IFC developed a Master
Cooperation Agreement (MCA) that streamlines how IFC works
with DFIs to co-finance projects when IFC is the mandated lead
arranger
 IFC has mobilized over US$9.5 billion from parallel lenders,
including DFIs and local commercial banks for borrowers, globally
B LoansB LoansDebt Mobilization - Parallel Loans
15

US$ ‘000
TOP 20 PARALLEL LENDERS
New Signings July 1, 2016 – June 30, 2017
B LoansB Loans
1 INTER-AMERICAN INVESTMENT CORPORATION 230,000
2 FMO 163,825
3 ASIA DEVELOPMENT BANK 158,500
4 OPEC FUND FOR INTERNATIONAL DEVELOPMENT 101,845
5 DEG 97,900
6 INDUSTRIAL AND COMMERCIAL BANK OF CHINA 90,000
7 PROPARCO 82,345
8 OPIC 79,000
9 ISLAMIC DEVELOPMENT BANK 66,000
10 JAPANESE INTERNATIONAL COOPERATION AGENCY 62,840
11 ADITYA BIRLA FINANCE 50,400
12 CHINA CONSTRUCTION BANK 50,000
13 CDC 47,000
14 ADITYA BIRLA MUTUAL FUND 31,000
15 INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY 28,825
16 DEVELOPMENT BANK OF SOUTHERN AFRICA 27,345
16 INVESTEC BANK 27,345
18 EMERGING AFRICA INFRASTRUCTURE FUND 25,000
19 AFRICAN DEVELOPMENT BANK 20,000
20 CORPORACION ANDINA DE FOMENTO 15,000
Debt Mobilization - Parallel Loans
16

SYNDICATED PARALLEL LOAN STRUCTURE
17
Inter-creditor and
Security
Sharing
Agreement

 IFC approaches parallel lenders as if syndicating a B Loan
 Early contact for preliminary interest and feedback
 Assist due diligence process by sharing information memorandum and
managing project appraisals
 Negotiate documentation among all parallel lenders
 All lenders sign a single Common Terms Agreement and short form
individual loan agreements covering money terms (IFC does not act as
Lender of Record for parallel lenders)
 Where there is a local currency loan by a local bank / FI, which may,
due to the requirements of the lender need to be governed by local law,
we have developed a “Common Terms Schedule”, which replaces the
CTA.
SYNDICATED PARALLEL LOANS
18

 Enhanced access to financing from DFIs and other
ineligible B Loan participants, particularly for longer tenors
and in frontier countries and sectors
 Time and cost savings throughout the life of the facility
19
 Increased deal flow through IFC’s global origination capacity
 Access to IFC’s due diligence, structuring and restructuring skills
and global presence
 Time and cost savings
 All lenders, including IFC, share the same rights and obligations
BENEFITS TO LENDERS

 MCPP is a syndicated loan platform providing a portfolio approach to
debt mobilization & allowing institutional investors the opportunity
to passively participate in IFC’s future loan portfolio.
 Investors provide capital on a portfolio basis, which can be deployed
by IFC in individual investments across all regions and sectors in
accordance with IFC’s strategy and processes, subject to the
investors’ specified eligibility criteria.
 MCPP investor approval is sought pre-mandate; project appraisal,
approval, commitment, and supervision are managed directly by IFC
with the MCPP investor passively following IFC decisions.
 Allows IFC to provide larger tickets and thereby enabling IFC to
complete financing packages on a standalone basis
B LoansB Loans
MANAGED CO-LENDING PORTFOLIO PROGRAM (“MCPP”)
B LoansB LoansDebt Mobilization - MCPP
20

B LoansB LoansDebt Mobilization - MCPP
21
BENEFITS TO INVESTORS
 Borrowers have certainty of financing at mandate stage
 Reduces transaction costs through a streamlined engagement
with IFC
 Exposure to a diversified pool of assets
 Cost effective delivery process that directly leverages IFC in built
capacity

MCPP: A New Future For Debt Mobilization
MCPP
MCPP
SAFE
MCPP
FIG
(Credit
Insurance)
MCPP
Allianz
MCPP
Unfunded
MCPP
Sovereign
MCPP
Infrastructure
MCPP
Prudential
MCPP
HKMA
MCPP
AXA
Debt Mobilization - MCPP
22
MCPP
URP

MCPP Sovereign:
SAFE
 In 2013, the People's Bank of
China, through SAFE, its State
Administration for Foreign
Exchange, pledged $3 billion under
the MCPP platform to be committed
over a six-year period.
 In one-and-a-half years, $1.5 billion
was disbursed in 60 investments
across the IFC’s portfolio in 30
different countries.
 This collaboration is particularly
significant because the IFC used it
as a template to launch the MCPP
Infra Initiative, and was the
foundation for MCPP HKMA.
MCPP Sovereign:
HKMA
 In September, 2017 the Hong
Kong Monetary Authority
(HKMA) signed on to become
a part of IFC’s MCPP program.
 MCPP HKMA follows the
SAFE structure, and officially
launched in October, 2017.
 HKMA has committed $1
billion.
23

MCPP: Basic Sovereign Investor
Administrative
Agreement
Sovereign
Investor
IFC
Trust Fund
Loan Agreements
and Portfolio
Management
Borrowers
IFC as Implementing
Entity
24

MCPP Infrastructure
 MCPP Infrastructure officially launched in October, 2017.
 Designed for institutional investors seeking to increase their
exposure to emerging-markets infrastructure.
 Platform on which private institutional investors and IFC co-
invest in infrastructure loans in emerging markets.
 IFC will originate, approve, and manage the portfolio of loans
that will mirror IFC’s own portfolio in infrastructure.
 These are MCPP B Loans available to eligible infrastructure
projects.
 Commitments: Allianz $500mn, Prudential $500mn and AXA
$500mn (expected)
25

MCPP: Basic Institutional Investor
Facility Participation
Agreement
Fund
Loan Agreements
and Portfolio
Management
Borrowers
B-Lender
26

MCPP Infrastructure Structure
27
 With support from
SIDA, IFC will
provide a limited
first-loss
guarantee on the
investments to
meet the risk-
reward profile that
institutional
investors require.

MCPP Unfunded – FIG (Credit Insurance)
 MCPP Financial Institutions will tap
$500 million apiece in unfunded
credit insurance from Munich Re
and Liberty Specialty Markets, part
of Liberty Mutual Insurance.
 This will enable IFC to provide at
least $2 billion in loans to
commercial banks, offering
additional capacity for on-lending to
small and medium enterprises,
women-owned businesses, and
climate change strategies.
 The structure involves the insurers
taking pari passu credit risk with
IFC.
28

MCPP Unfunded – Unfunded Risk Participation (URP)
 Investors provide IFC with an unfunded risk participation (“URP”) on a
portion of an A Loan, with IFC retaining the full asset on its balance
sheet.
 IFC and the insurer sign a Facility Unfunded Risk Participation
Agreement (“FURP”) which details the terms and conditions of the
investment relationship.
 IFC can provide larger financing to clients but receives capital relief on
the part of the A Loan that is covered through the risk participation.
28

MCPP: General Drafting Notes
 MCPP Investor(s) are not party to the Financing Documents –A Loan and MCPP Loan
documented in a single loan agreement; IFC signs for itself and as Implementing Entity
for the MCPP loan.
 Generally, no consents or approvals are required from MCPP Investor(s) - IFC as
Implementing Entity has full delegated authority, including in respect of
implementation, monitoring, oversight, modification and any restructuring; consent or
approval rights that Parallel Lenders or B Lenders might have should not be extended to
MCPP Investors.
 Disbursements of the MCPP Loan are conditioned upon receipt of funds from the
MCPP Investor(s).
 IFC will share information with the MCPP Investor(s) during the life of the MCPP Loan.
 Even if there are multiple MCPP Investors, there will only be one MCPP Loan and an
Omnibus MCPP Agreement among them and IFC to provide guidance on matters that
may not have been adequately covered by the relevant Administration Agreements,
such as, sharing.
 The Administration Agreement(s) and Omnibus MCPP Agreement (if any) are not
Transaction Documents and not shared with the Borrower
29

A LOAN PARTICIPATION SALES (ALPs)
 An A Loan Participation (“ALP”) is an effective exposure management
tool which IFC uses to reduce its risk exposures – dollar for dollar – to
a client, country or sector.
 An ALP is created through the partial sale of an A Loan to commercial
banks or other financial institutions and is governed by a Participation
Agreement, much like the agreement used for IFC B Loans. As in a B
loan, IFC remains the lender of record for the entire A Loan. An ALP
participant shares all project risks with IFC and has the same benefits
of a traditional B Loan participant.
 Since 2002, IFC has sold twenty-one ALPs valued at over US$429
million to over twenty-three financial institutions. Through this
mechanism, IFC has reduced its exposure constraints in Argentina,
Brazil, India, Romania, Russia, Thailand & Turkey.
Debt Mobilization - ALPs
30

Borrower
Insurance
Counterparty
Loan Agreement
A Loan
Unfunded Risk
Participation
Agreement
UNFUNDED RISK PARTICIPATIONS
B LoansB LoansB LoansB LoansDebt Mobilization - URP
31
 One loan agreement – IFC is lender of
record and administers entire loan
 IFC fully shares project risks with
insurance counterparty
 Typically executed on a silent
participation basis

MULTIPLE INVESTMENT PRODUCTS
IN A SINGLE PROJECT
Borrower
Institutional
Investor #1
Counter
Guarantee's/MCPP
(SIDA)
LP
MCPP LoansB LoansA Loans
H(ALP)
Standard
B Loans
(B1)
B Bonds
MCPP
B Loans
(B2)
Investment
Fund
Financial
Institution
Sovereign
#1
Sovereign
#2
Sovereign
#3
Debt Mobilization - Summary
32
LP
Institutional
Investor #2
Institutional
Investor #3
URP
MCPP URP
(FIG)
Credit
Insurance

Equity Mobilization
EQUITY MOBILIZATION
33

 Pursuant to the EMP, IFC mobilizes additional equity for existing and new
clients and is paid a fee for this work.
 IFC’s scope of work includes identifying and contacting potential co-
investors, working with Issuers on initial structuring and pricing of investment
opportunities, and providing deal support to potential co-investors.
 Even though IFC, as an international organization, does not have a
broker-dealer license, a recent full legal evaluation has determined that IFC
can provide Equity Mobilization services to its clients, subject to certain
limitations.
 In connection with launching the EMP, IFC developed a legal/compliance
framework that includes (i) template agreements, with key risk mitigation
provisions, (ii) procedures, (iii) a compliance manual, and (iii) required internal
training and testing for project teams.
 To date, 1 deal has been completed – Summit Group. IFC earned a fee of
$3.6m, charging 2%-2.5% on the total invested amount of $175.5m. The
resulting fee on the total mobilized amount of $113.75m was 3.2%.
WHAT IS THE EMP?
Equity Mobilization
34

EMP (Cont’d)
In Scope – Equity Mobilization Out of Scope – Equity Syndication
Identifying deals for co-investment Activities related to mobilizing capital in
deals in which IFC does not invest
Identifying and contacting potential co-
investors
Producing an Information Memo on behalf
of the Investee Company
Initial structuring and pricing – preparing
the term sheet
Fully structuring and processing the
transaction and selling down part of the
equity thereafter
Providing deal support – e.g. sharing due
diligence materials/leading a joint appraisal
Drafting and negotiating legal agreements
with Co-investors on behalf of the Investee
Company
Charging a fee for mobilizing capital
(should aim for higher fee than debt mobilization
fee)
Fees not commensurate with IFC role
Equity Mobilization - EMP
35

IFC ASSET MANAGEMENT COMPANY, LLC
Equity Mobilization - AMC
36

32
 IFC Asset Management Company, LLC, a wholly owned subsidiary of IFC,
mobilizes and manages capital for investment in developing and frontier
markets.
 It was created in 2009 to provide investors with access to IFC’s emerging-
markets investment pipeline and to expand the supply of long-term capital to
these markets, enhancing IFC’s development goals and generating profits for
investors by leveraging IFC’s global reach, standards, investment approach,
and track record.
 AMC has approximately $9.1 billion in total assets under management. It
manages thirteen investment funds on behalf of a wide variety of institutional
investors, including sovereign wealth funds, pension funds, and development
finance institutions.
AMC
37

100%
100%
Management
Agreement
AMC Fund LP
IFC
AMC
Fund GP
General
Partner
Co-investment Agreement
Support Services Agreement
Limited Partner 1
Limited Partner 2
Limited Partner 3
20% of Commitments
(Limited Partner)
AMC – Typical Structure
38

 IFC Capitalization (Equity) Fund
 IFC Capitalization (Sub Debt) Fund
 IFC African, Latin American and Caribbean Fund
 Africa Capitalization Fund
 IFC Russian Bank Capitalization Fund
 IFC Catalyst Fund
 IFC Global Infrastructure Fund
 China-Mexico Fund
 IFC Financial Institutions Growth Fund
 IFC Global Emerging Markets Fund of Funds
 IFC Middle East and North Africa Fund
 IFC Women Entrepreneurs Debt Fund
 IFC Emerging Asia Fund
_
AMC FUNDS
IFC Asset
Management
Company had about
$9.8 BILLION
in assets under
management in FY17
39

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