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Supporting Private Health Care in Emerging Markets

January 2011

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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.

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2003 2004 2005 2006 2007 2008 2009 2010

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IFC's own account* Syndications

IFC Financing as of June 30, 2010Total Commitments: US$12.7 billion for own account, US$5.4 billion mobilized

*Includes loans, equity, guarantees, risk management products

Infrastructure 16%Global Manufacturingand Services 17%

Subnational Finance 2%

Private Equity and Investment Funds 5%

Health and Education 3%

Global Financial Markets Group 37%

Oil, Gas, Mining, andChemicals 9%

Agribusiness 6%

Global ICT 4%

IFC Portfolio as of June 30, 2010, by Industry

Total US$38.9 Billion

IFC Portfolio as of June 30, 2010, by Region

Total US$38.9 Billion

Middle East and North Africa 11%

Europe and Central Asia 25%

East Asia and the Pacific 14%

Sub-Saharan Africa 13%

South Asia 11%

Global 1%

Latin America and the Caribbean 25%

IFC FY10 Annual Report data

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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

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IFC has a well established franchise inEurope & Central Asia

Historical CommitmentsUS$ millions

Fiscal Year 2010 CommitmentsUS$ millions

LoansUS$ 1,807

SyndicationsUS$387

Guarantees US$539

Equity US$624

US$ 3,357 million

IFC Portfolio by Country (largest exposure)US$ millions

Turkey US$2,032

Russia US$2,286

US$ 12,278 million

UkraineUS$880

Total Committed Portfolio US$12,278

Committed portfolio for IFC’s account US$9,691

Committed portfolio held for others(loan and guarantee participants)

US$2,587

Regional PortfolioUS$ millions

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FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

IFC syndications IFC loans, equity, guarantees, risk mgt.

IFC FY10 Annual Report data

Health and Education Sectors are corporate priorities and pillars of IFC’s Strategy

FY 2010: committed $429mil in 17 projects

IFC Health and Education at a glance

Health Sector:Health Sector:97 private health projects in 36 countries

US$ 4.8bil of total project value

US$ 1.2bil of CHE total investments

Education Sector:Education Sector: 67 private education projects in 34 countries

US$ 1.5bil of total project value

US$ 505mil of CHE total investments

INVESTMENT TRACK RECORDINVESTMENT TRACK RECORD

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Objective: Support Growth of Sustainable Health Care Companies

To achieve this objective we

• Provide financial advice and innovative financing to private and sub national healthcare and education companies

• Use our global industry expertise to advise companies and shape projects and maximize chances of success

• Promote best practices and set industry standards• Build credibility of clients in early development stages • Support expansion of our clients to other countries/ regions• Mobilize other private sector investors• Support IFC’s advisory department in their privatization / PPP advisory work• Work with the WB to help countries improve regulatory environment for

provision of education and healthcare

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IFC has partnered with leading health companies

MedLife

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MedLife, Romania

Sponsor: MedLife, a provider of a range of medical services through a network of 12 outpatient clinics and 3 laboratories in Bucharest

Project: Construction of (i) a 100-bed hospital in Bucharest, and (ii) 5 40-bed hospitals in smaller cities in Romania

Project Cost: US$24.8 million

IFC Support: • IFC provided a US$5 million senior loan and $5 million

equity• IFC provided advice on corporate governance

Result• MedLife entered the hospital business with completion

of a hospital in Bucharest in July 2007• IFC’s investment raised profile of MedLife in local

financial market

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Euromedic, Eastern Europe

Sponsor: Euromedic, a leading provider of diagnostic imaging and hemodialysis services throughout Southern, Central and Eastern Europe (Hungary, Poland, Romania & Bosnia).

Project: Project 1: Expansion of diagnostic imaging network in Hungary and establishment of diagnostic and hemodialysis network in Poland. Project 2: Expansion of the network in Poland, Hungary, Romania and Bosnia. Establishment of new networks in region including Croatia.

Project Cost: Project 1: $37 million, Project 2: $26 million

IFC Support:

• IFC provided € 24.4 million in senior loans

Result:

• IFC provided Euromedic funding not available to it in Eastern Europe

• Euromedic’s 21 diagnostic centers increased access to high quality private healthcare for local population

• Euromedic was able to integrate its services in the public healthcare system

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Hospital Metropolitano S.A., Nicaragua

Sponsor: The Pellas Group, one of the largest conglomerates in Central America with diversified presence in various industries.

Project: Expansion with new 32-bed hospital building; construction of an oncology center and 67 new medical offices building; refinancing of existing bank debt

Project Cost: US$25.9 million

IFC Support: • Provided US$10 million senior secured A loan and US$1 million

income participating C loan

Results:• Access to local high quality healthcare in Nicaragua • Construction of the first integrated oncology center in Nicaragua • Continuous efforts to expand health services to lower income markets• Creation of center of excellence for the country and region

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Thank you

Michele ShueyPrincipal Investment Officer, IFC

mshuey@ifc.org+1 202 473 8703

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IFC’s expert teams work closely with the client

• 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 2 – 4 weeks 1 – 2 weeks 3 – 5 weeks 4 weeks As appropriate

SupervisionBoard

Approval

Negotiation &

Documentation

Investment Review Meeting

AppraisalIdentification &

Review

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• 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

CHE has full range of financing capabilities

Senior Loan

B Loan / Syndication

Mezzanine

Equity

StructuredProducts

Advisory Services

Health and Education Portfolio at a glance

Health portfolio: Health portfolio: 54 active projects

$866 mm committedEducation portfolio: Education portfolio: 32 active projects

$345 mm committed

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Acibadem, Turkey

Sponsor: Acibadem Healthcare Group, a leading private healthcare provider in Istanbul, Turkey. The Group owned and operated 2 full service hospitals, 3 outpatient clinics, 1 ophthalmology clinic and 1 central laboratory

Project: Project 1: Construction of an 80-bed oncology / neurosurgery hospital in Istanbul and a 200-bed general hospital in Bursa. Project 2: Expansion of networks in Istanbul, Izmir and Ankara.

Project Cost: Project 1: US$62 million, Project 2: US$113 million

IFC Support: • IFC provided US$60 million long-term debt

Result

• Acibadem was able to undertake a significant expansion in healthcare provision (by 378 beds) and, at the same time, demonstrate the credibility of the private health sector in Turkey

• Acibadem was successful in becoming the 3rd hospital in Turkey to receive JCI accreditation