International Finance Corporation May 2013 Istanbul Giovanni Daniele Manager, Manufacturing & Chemicals Europe, Middle East and North Africa

Table of Contents IFC Overview Financing Needs in Emerging Markets and ECA: Risks & Opportunities IFC in ECA: results to date and strategy going forward IFC Value Proposition: how IFC can facilitate investment IFC Project Cycle IFC Teams and Contacts

Who We Are, What We Do IFC is the largest global development institution focused exclusively on the private sector – the global leader in private sector development finance We invest, advise, mobilize capital, and manage assets – providing solutions for an inclusive and sustainable world The World Bank Group consists of five closely related institutions: IBRD: The International Bank for Reconstruction and Development, IDA: The International Development Association, IFC: International Finance Corporation, MIGA: The Multilateral Investment Guarantee Agency, ICSID: The International Center for the Settlement of Investment Disputes

IFC’s Structure Owned by 184 member countries IFC is the main driver of private sector development in the World Bank Group Collaborates with other members of the group, including the World Bank (IBRD and IDA, MIGA and the International Centre for Settlement of Investment Disputes) Global: Headquartered in Washington, D.C.; Operating Center in Istanbul, Turkey Local: More than 100 offices worldwide in 95 countries

IFC’s Three Businesses IFC Asset Management Company Investment Services Advisory Services Loans Equity Trade finance Syndications Securitized finance Blended finance Access to finance Sustainable Business Investment Climate Public-Private Partnerships Wholly owned subsidiary of IFC Private equity fund manager Invests third-party capital alongside IFC Originally known mainly as a project finance specialist, today IFC has three distinct businesses: Investment Services, Advisory Services, and Asset Management. These are rolled out on a global-local delivery platform, combining global knowledge of industry, markets, and risk management from our Washington HQ with the understanding of local markets that comes from our strong field presence. All of these businesses fit together seamlessly and have synergies with each other. No matter which side we are drawing on at any one time, we measure ourselves just as much by our development impact as by our financials. And we are committed to rigorous results measurement. We work with strong global network. For example ,we currently have more than 1,500 client companies in our portfolio, including more than 300 banks and other financial institutions, and more than 150 investment funds. They are major players in development, as are our donor partners: 32 bilateral governments as well as other significant funding sources such as the European Union, the Bill and Melinda Gates Foundation, and others. This allows us to help governments with business-friendly policy advice, companies with corporate advice, in addition to our traditional investment role. $4.5 bn under mgmt $56.5 bn portfolio $200 mn per year

The Reach of IFC’s Projects (FY12) Despite the challenging economic context, IFC invested a record $20.3 billion for the year Last year our clients provided: 2.5 million jobs $200 billion in micro, small, and medium enterprise loans 12.2 million patients with health care treatment 34.3 million people with clean water 41.9 million people with power connections 900,000 million students with education

Investments by Region, FY12 19% of IFC’s total business is in ECA Commitments for IFC’s Account: $15.4 Billion Global >1% Sub-Saharan Africa 18% Middle East and North Africa 14% East Asia and Pacific 16% Latin America and the Caribbean 24% South Asia 8% Europe and Central Asia 19%

Growing Financial Needs for EM globally Financing Needs: EM’s as a whole did not face financing needs in the 2005-08 period, but will be facing needs of around $600bn in 2013 – a 68% increase relative to 2012. Financing needs are projected at $1trillion for 2016. Financing needs in non-IDA countries switched drastically from a surplus in 2005-08 to a deficit of $393bn in 2013 and a projected deficit of $824bn in 2016. Capital Flows: Debt and equity flows to EM’s have already recovered to pre-crisis levels, and are projected to keep increasing towards $1.5 trillion by 2016, mainly driven by FDI flows, bond issuance and bank lending. Reserve Accumulation is expected around $350bn per year in the 2013-16 period, well below its peak of over $1.3 trillion in 2007.

ECA and LAC face the largest financing needs ECA and LAC face the largest financing needs among EM. In both regions, these needs are projected to increase significantly further in the coming years – financing requirements may reach $508bn in ECA in 2016 (vs. $377bn in 2013), and $330bn in LAC (vs. $273bn in 2012). In any case, projected capital flows are expected to close these gaps and allow further reserve accumulation each year in both regions . Global or regional shocks may affect investor’s confidence and impact the projected levels of capital flows. • While the MENA region as a whole will keep running surpluses of over $100bn per year (despite large within-region differences) , the historic surpluses in EAP are declining fast and are projected to turn into deficits in 2015-16 – driven by China. The EAP region may face financing needs of $111bn in 2016 (vs. a surplus of $137bn in 2012). • Needs in Africa are expected to jump from $43bn in 2012 to around $50-52bn in 2013-14, and would remain relatively stable around $140bn in South Asia in 2013-16.

ECA Financing Needs: largest countries

Investing in ECA: risk & opportunities going forward Coming out of a very difficult period, a number of markets seem to have a more favorable outlook; growth in ECA at around 4 percent is higher than world average Financing needs remain large (and growing) and this poses a key risk for the region Given low portfolio flows, attracting FDI and bank flows is critical, so is the role of IPAs Exposure to EU markets remains a concern Need to focus on competitiveness and increase productivity Opportunities for sector consolidation and regional expansion by industry leaders

IFC in ECA IFC has been contributing to the development of the private sector in ECA for over 45 years. IFC’s five largest exposures are in Turkey, Russia, Ukraine, Romania and Serbia. Turkey is IFC’s fourth largest client in terms of committed portfolio. We have offices in 21 countries in ECA In the ECA region, since 2008 IFC invested $13.4 billion in 560 projects and mobilized $5.4 billion through other financial institutions.

In 2010, IFC Launched Istanbul Operation Center (IOC) IFC’s First Operations Center in Istanbul to Serve EMENA Region The IOC, with 195 staff, is at the center of a network of regional, sub-regional and smaller country offices, integrated with Washington DC and working to serve the needs of the EMENA region… … to deliver a program of over US$6.8 billion in total investment (own account and mobilization) in 171 projects and US$53 million in Advisory Services. (FY12 results)

IFC Annual Commitments in ECA, $mn IFC Portfolio in ECA IFC Annual Commitments in ECA, $mn (as of February 28,2013) ECA Committed Portfolio, $mn( as of March 31,2013) 670

IFC Sector Priorities in ECA SMEs for jobs, economic diversification and higher equality Agribusiness for food safety and Infrastructure & Energy Climate-smart investments South-south investment Health & Education Supporting regional champions to foster regional integration and productivity growth

How IFC can facilitate investment Provide political risk mitigation Long-term tenors Global expertise combined with local knowledge Ability to mobilize LT capital (including equity through AMC) Advisory services Equity Honest broker role Encouraging adoption of environmental best practices Long-term relationship across emerging markets workldwide

IFC’s Investment Guidelines Committed and reputable sponsors with established track record in the industry Ability to assume project completion risk Sound market fundamentals: favorable supply/demand outlook also taking into consideration new capacity Cost competitiveness Absence of market distortions Prudent capital structures Adequate risk/return profiles Sound corporate governance

We agree on a specific timeline to meet client’s needs IFC’s Project Cycle Early Review Client needs determined Assessment of project’s impacts and development contributions Management committee approval Mandate letter Due Diligence Assessment of business opportunities and risks Analysis of environmental and social opportunities and risks Appraisal Credit committee approval Disclosure Disclosure of environmental and social information Opportunity for public comment Commitment and Disbursement Negotiation and agreement of principal terms Board approval Signing of legal documents Disbursement Negotiation Monitoring Annual review of project performance We agree on a specific timeline to meet client’s needs 18

How We Finance Projects Project Type IFC Investment Greenfield, total cost less than $50 million Greenfield, total cost more than $50 million Expansion or rehabilitation Up to 35% of project cost for IFC’s account Up to 25% of project cost for IFC’s account Up to 50% of project cost Umbrella for participants in IFC’s syndication program: IFC lender of record, immunity from taxation and provisioning requirements. IFC’s total financing (for its own account) must be less than 25% of total company capitalization

Financial Products - From Equity to Debt Senior Debt & Equivalents Equity Mezzanine / Quasi Equity Senior Debt (corporate finance, project finance) Fixed/floating rates, US$, Euro and local currencies available Commercial rates, repayment tailored to project/company needs Long maturities: 8-20 years, appropriate grace periods Range of security packages suited to project/country Mobilization of funds from other lenders and investors, through cofinancings, syndications, underwritings and guarantees Subordinated loans Income participating loans Convertibles Other hybrid instruments Corporate and JV Typically 5-15% shareholding (not to exceed 20% of total equity) Long-term investor, typically 6-8 year holding period Not just financial investor, adding to shareholder value Usually no seat on board Infraventures (early equity investments)

IFC Borrower Participants Mobilizing Financing - Syndication “B-Loan” Structure Loan Agreement IFC Borrower A + B Loans Participation Agreement B Loan A loan is for IFC’s own account B loan is for the account of participant commercial banks Only one loan agreement signed by the borrower and IFC IFC is the lender of record for the entire loan (A+B) Structure allows participants to benefit from IFC privileges and immunities Better pricing/tenors than otherwise available; preferred creditor access to foreign exchange IFC Loans exempt from withholding taxes Participants

IFC Management Team in the Region Istanbul is the new Hub office for the Region Vice President of IFC Dimitris Tsitsiragos (Istanbul) Regional Director Tomasz Telma (Moscow) Regional Director Mouayed Makhlouf (Dubai) Director of Natural Resources and Infrastructure Gulrez Hoda (Istanbul) Director of Manufacturing, Agribusiness & Services Guy Elena (Istanbul) Director of Financial Markets Aftab Ahmed (Istanbul)

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