The IDB Group Instruments and Services for Non-Sovereign Clients Private Sector Coordination Office January 2007

The IDB Group Promoting Private Sector Development Summary of Products and Instruments Contact Information How to Apply Agenda IDB Group

 The IDB Group consists of the Inter-American Development Bank (IDB), the Inter- American Investment Corporation (IIC), and the Multilateral Investment Fund (MIF).  The IDB Group is the main source of multilateral financing for economic, social and institutional development projects as well as trade and regional integration programs in Latin America and the Caribbean.  It provides loans, grants, guarantees, policy advice and technical assistance to the public and private sectors in its 26 Latin American and Caribbean borrowing member countries.loansgrantsguaranteestechnical assistanceborrowing member countries  The IDB Group works with sovereign (countries) and non-sovereign clients. The non-sovereign guaranteed projects are executed through two departments of the IDB as well as IIC and MIF. Each entity provides funding in accordance with specific objetives and are integrated under a single Private Sector Development Strategy. The IDB Group IDB Group

THE IDB GROUP PROVIDES A FULL RANGE OF FINANCIAL AND NON- FINANCIAL SERVICES THROUGH THREE PRIMARY CHANNELS Private Sector Department Inter-American Development Bank LARGE ENTERPRISES MEDIUM AND SMALL ENTERPRISES SMALL AND MICRO ENTERPRISES Promoting Private Sector Development IDB Group

 The Private Sector Department (PRI) of the IDB: Has primary operational responsibility for the Bank's financing of non-sovereign guaranteed operations in all sectors. PRI supports projects in the infrastructure (energy, transportation, sanitation or communications) and commercial sectors, capital market development, and trade finance through medium and long- term loans and guarantees.  Inter-American Investment Corporation (IIC): Supports small and medium-sized private enterprises in Latin America and the Caribbean that have limited access to long-term market financing. IIC financing tools include direct loans, direct equity or quasi-equity investments, lines of credit to local financial intermediaries for onlending in the form of smaller loans, agency lines with local financial institutions for joint lending, investment in local and regional private equity funds, and guarantees for and investment in capital market offerings.  The Multilateral Investment Fund (MIF): Using grants and investment mechanisms, the MIF supports small-scale, targeted interventions that pilot new approaches and act as a catalyst for larger reforms to encourage private sector growth. It supports changes in the policy and regulatory environment, building the capabilities of the workforce, and strengthening small businesses and microenterprises. The MIF is the major source of technical assistance grants for private sector development in member countries of the IDB. MIF also supports promotes the conditions necessary for the growth and development of the microenterprise sector. Promoting Private Sector Development IDB Group

Promoting Private Sector Development IDB Group  The Multilateral Investment Fund (MIF): Using grants and investment mechanisms, the MIF supports small-scale, targeted interventions that pilot new approaches and act as a catalyst for larger reforms to encourage private sector growth. It supports changes in the policy and regulatory environment, building the capabilities of the workforce, and strengthening small businesses and microenterprises. The MIF is the major source of technical assistance grants for private sector development in member countries of the IDB as well as the Caribbean Development Bank.  Micro, Small and Medium Enterprise Division (MSM) of the IDB: Promotes the conditions necessary for the growth and development of the microenterprise sector: a favorable policy and regulatory environment; strong, sustainable institutions providing financial and nonfinancial services to meet the demand of microenterprises; improved access of low-income and disadvantaged microentrepreneurs (including women and indigenous peoples) to financial and business services; and expanded, continuous and permanent flows of resources for investment in microenterprise.

IDB Group enjoys certain privileges in its member countries de jure: exemption from withholding taxes de facto: preferred creditor status Preferred creditor status: Umbrella / Halo effect Competitive market pricing Product mix The Bank’s participation helps mitigate political risks: Oldest and largest multilateral lender to Latin America and the Caribbean: US$ 6-7 billion annually Cooperative, long-term relationship with member countries Risk sharing partnership Promoting Private Sector Development ADVANTAGES OF WORKING DIRECTLY WITH THE IDB GROUP

IDB GROUP INSTRUMENTS TO SUPPORT PRIVATE SECTOR DEVELOPMENT IN LAC GUARANTEES TRADE FINANCE EQUITY INVESTMENTS AND INVESTMENT FUNDS DIRECT LENDING AND LINES OF CREDIT TECHNICAL ASSISTANCE CAPITAL MARKETS Summary of Products and Instruments

IDB Group Senior and/or subordinated loans on IDB Group’s own account, syndicated loans and cofinancing with commercial banks and institutional investors for project and corporate finance Lines of Credit and on-lending to financial intermediaries for co-lending, leasing, factoring, housing finance and supply chain financing Direct Loans and Lines of Credit Partial credit guarantees to enhance project and corporate bond placements to help mitigate risk and achieve better financing terms Political risk guarantees provide coverage against defined non-commercial risks including currency inconvertibility and transfer, breach of contract by governments and expropriation of physical assets, among others Guarantees

Summary of Products and Instruments IDB Group Loans and partial credit guarantees for: Private, Public and Mixed Ownership (PPP) utility companies and project sponsors Warehousing facilities for accumulation of receivables Mortgage-backed securitizations for both residential and commercial mortgages Future flow securitizations for credit card receivables, trade receivables, etc. Structured investments Underwriting of securities and partial credit guarantees to support bond placements in US$ or local currency for corporate and project finance Structures include issues of secured and unsecured senior debt and subordinated debt Bond placements

Summary of Products and Instruments IDB Group Trade Finance Facilitation Program: (TFFP) Provides credit guarantees to cover the commercial correspondent banks on trade finance instruments (e.g. letters of credit) issued by LAC banks Trade Finance Facilities: Unsecured loans to leading financial institutions for on-lending to importers and exporters. Facilities mobilize commercial bank funding through B-loan participation Structured Trade Finance: Funding or partial credit guarantees for: Portfolio enhancement, covering banks’ exposure to trade-related credits Credit lines to international funds active in trade finance Securitization of export receivables Trade Finance Facilitation Program (TFFP)

Summary of Products and Instruments IDB Group Direct equity and quasi-equity investments for SMEs and microfinance institutions Participation in investments funds through loans, guarantees and equity to independently managed investment funds seeking to provide equity, including seed capital, mezzanine financing and senior loans to companies located in LAC Equity Investments and Investment Funds Grants for business associations, government entities, NGOs and others working in remittances, small business networks, corporate social responsibility, cleaner production, venture capital, supply chains, rural private sector development, public private partnership programs, sustainable tourism, among others Technical assistance for the preparation of infrastructure projects with governments, state-owned enterprises, mixed capital and private firms Technical assistance grants to support SMEs and microfinance for NGOs, and specialized financial institutions seeking to expand SME and microfinance activities Technical Assistance

IDB Group Summary of Products and Instruments Streamlining regulations Innovative business relationships Eco-efficiency Quality management Financing options Information technologies Skills standards and credentialing Small Business Innovation partnerships program Regulatory and supervisory framework Strengthening microfinance entities Microenterprise Regulatory framework Facilitation of trade and investment Labour market modernization Market functioning Capital market development Market transparency measures Regulatory reform and supervision Financial sector and capital markets CORE TECHNICAL ASSISTANCE AREAS Infrastructure Project Preparation Implementation of PPP Programs Preparation of Concessions Strengthen of Public Authorities Infrastructure Sector

IDB Group Typical Due Diligence Typical due diligence  Viable business plan  Sponsor strength + track record  Creditworthy project parties  Corporate governance  Regulatory & legal framework  Satisfactory security structure  Acceptable environmental and social, health and safety standards

IDB Group Contact Info Typical due diligence The Private Sector Coordinator is responsible for the coordination and oversight of all of the IDB Group’s private sector activities, working to increase the effectiveness of these efforts by promoting cooperation, encouraging synergies, and ensuring harmonization of the Group’s private sector strategies, procedures, and programs. For general information about Bank Group products and activities please contact, Private Sector Coordination Office Tel: +1 (202)