Supporting Private Education in Emerging Markets September 2010

2 International Finance Corporation at a glance History, ownership and vision Founded in 1956 to foster private sector investment in the developing world Part of the World Bank Group and owned by its 179 member countries Vision: That poor people have the opportunity to escape poverty and to improve their lives. IFC Financing as of June 30, 2009 Total Commitments: US$10.5 billion for own account, US$4.0 billion mobilized *Includes loans, equity, guarantees, risk management products Infrastructure 17%Global Manufacturing and Services 18% Subnational Finance 1% Private Equity and Investment Funds 5% Health and Education 2% Global Financial Markets Group 36% Oil, Gas, Mining, and Chemicals 10% Agribusiness 7% Global ICT 4% IFC Portfolio as of June 30, 2009, by Industry Total US$32.4 Billion IFC Portfolio as of June 30, 2009, by Region Total US$32.4 Billion Middle East and North Africa 11% Europe and Central Asia 26% East Asia and the Pacific 14% Sub-Saharan Africa 11% South Asia 12% Global 1% Latin America and the Caribbean 25% IFC FY09 Annual Report data

3 IFC has a well established franchise in Latin America Historical Commitments US$ millions Fiscal Year 2009 Commitments US$ millions Loans US$ 1,648 Syndications US$670 Guarantees and RM US$824 Equity US$250 US$ 3,392 million IFC Portfolio by Country (largest exposure) US$ millions Brazil US$ 2,364 Argentina US$1,054 Colombia US$873 US$ 12,201 million Total Committed PortfolioUS$12,201 Committed portfolio for IFC’s account US$8,776 Committed portfolio held for others (loan and guarantee participants) US$3,425 Regional Portfolio US$ millions IFC FY09 Annual Report data

4 IFC Investment Strategy: 3 Fundamental Principles Commercially viable investments ―Market based ―Must produce returns Value added beyond capital ―Opportunity to help clients achieve higher standards of management and social responsibility Strong development impact ―Support projects that will expand much needed services in a socially and environmentally responsible way

 The Education Sector is a pillar of IFC’s Strategy  IFC has invested in 64 projects in 31 countries  Total project value: US$1,577 million 5 Summary of IFC Investments in Education * Total education portfolio size US$316 million

Examples of IFC Investments in Education Education US$30mm Bond Guarantee Chile US$30mm Senior Loan Mexico US$8mm Senior Loan Argentina US$39mm in Senior Loans Brazil US$30mm Senior Loan US$50mm Guarantee Chile US$18.4mm Guarantee Pakistan US$30mm in Senior Loans US$1mm Capital Mexico US$5mm Senior Loan Trinidad Tobago US$8mm Senior Loan Lebanon US$7.3mm Senior Loan Vietnam US$12mm Senior Loan Turkey US$5mm Senior Loan Uruguay US$2.5mm Senior Loan Ghana US$8mm Equity Investment Mexico US$14mm Student Loan Guarantee Brazil

7 Global Trends in Education Demand Side: Demographic Factors : <25 year old -- over 2 bln in emerging markets 0,7% annual growth Rising income levels and increasing expectations Economic growth fueling need for educated labor force Increasing demand for secondary, technical and vocational education and training (TVET) Supply Side: Significant growth in primary/secondary education (Education for All) Highly fragmented industry Franchise model gaining traction esp. in tertiary education Governments unable to meet demand and keen to pursue PPPs Technology aiding distance learning Major Regional and International Players Anhanguera Educacional Participações S/A

8 Up to 12 years final maturity and 2 to 3 years grace period for principal on average Security package typical: physical assets, pledge of shares, leases, etc. Market based pricing Available in fixed / floating and, depending on market conditions, local or USD currency IFC syndicates portions of loans in order to mobilize additional financing partners Commercial banks take comfort in IFC due diligence and structuring experience Over 150 commercial banks and other institutions currently participate in IFC’s B loan program Hybrid featuring characteristics of both debt and equity –Subordinated, convertible, income participation, bullet repayment and others Typically in the form of common or preferred stock Denominated in local currency Securitizations: asset-backed securities, including future revenues, receivables, etc. Guarantees: partial credit guarantees enhancing credit worthiness of client's financing Risk-sharing facilities: allowing for alternative risk allocation IFC provides technical assistance / advisory services in support of its clients Country and sector specific Funded by donor governments and other multilateral institutions IFC has a Full Range of Financing Capabilities Senior Loan B Loan / Syndication Mezzanine Equity Structured Products Advisory Services

9 IFC’s Teams Work Closely with Clients Identify project Analyze and discuss with company business plan and sources and uses of funds Obtain management approval to formally consider investment In-depth business review Senior management interview and site visit Obtain approval to negotiate final transaction terms Negotiate final investment terms IFC lawyers initiate draft investment documents Final approval Sign legal documents Disbursement IFC monitors the project closely Consults periodically with project managers Field missions to enterprise Requires progress reports, annual audited statements, and other material information 2 – 4 weeks 1 – 2 weeks3 – 5 weeks4 weeksAs appropriate Supervision Board Approval Negotiation & Documentation Investment Review Meeting Appraisal Identification & Review