Financing Solutions for Urban Infrastructure

IFC Approach to Financing

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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 co-financing, syndications and guarantees

• Subordinated loans• Income participating loans• Convertibles • Other hybrid instruments

• Typically 5-20% shareholding (max 20% of total equity)• Long-term investor, typically 5-8 year holding period• Not just financial investor, adding to shareholder value• Infraventures (early equity investments)

FINANCIAL PRODUCTS - FROM EQUITY TO DEBT

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HOW WE FINANCE PROJECTS

• 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

Project Type IFC Investment

Greenfield, total costless than $50 million

Greenfield, total costmore 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

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IFC Subnational Financial Program

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IFC GLOBAL EXPERIENCE IN SUBNATIONAL FINANCE

Total Subnational Finance Program

Includes both Municipal Infrastructure and transactions with SOEs and Financial Institutions >US$ 2.0 billion committed >US$ 490 million syndicated >US$ 1.2 billion outstanding

52 projects

41 clients

24 countries

Total Municipal Infrastructure

> US$ 1.0 billion committed > US$ 300 million syndicated

39 projects

29 clients

15 countries

0 5 10 15 20 25 300

200

400

600

800

1,000

779613574

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IFC Subnational Portfolio(as of February 28, 2015)

EMENA

LAC

ASIA

Africa

Number of Projects

US

$ m

illi

on

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ELIGIBLE CLIENTS UNDER IFC SUB-NATIONAL PROGRAM

• Municipal and regional governments (LGUs)

• Municipally and Regionally owned infrastructure service entities

• Selected state owned infrastructure enterprises (SOEs)

• Banks and financial intermediaries that finance subnational infrastructure

• Public Private Partnerships (PPPs) that provide key subnational infrastructure services

1733%

2854%

713%

Subnational Commitments by Client TypeNumber of Projects

Cumulative since FY 2003, as of Febrruary 28, 2015

SOE

LGU & Muni Co

Other

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SECTOR COVERAGE

• Water, wastewater, solid waste management• Roads, street lighting, traffic engineering, bus transit systems, intercity rail track • Power transmission, gas networks• District heating

Note: Municipal Infrastructure includes transactions with municipal governments and municipally-owned companies.

• Social infrastructure, such as health and education

• Fixed common (landlord) infrastructure in ports and waterways

• Other essential public services

IFC Subnational Transaction Examples

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SAMPLE OF IFC INVESTMENTS IN EUROPE AND CENTRAL ASIA

Brunswick Rail

Eurobond $25 million

Lender

Russia

October 2012

Cernavoda and Pestera

Lender

Romania

June 2011

A Loan: $99.7 millionB Loan: $36.2 million

Ceska Sporitelna

Lender

Czech Republic

July 2010

$58.4 million

Eneriisa II

Turkey

March 2011

A Loan: $89.9 millionB Loan: $712.3 million

Lender and Syndicator

SEDASA Loan: $75 million

Turkey

December 2010

B Loan: $75 millionLender and Syndicator

AES Kavarna

Lender

Bulgaria

December 2008

A Loan: $51.8 millionB Loan: $41.4 million

Shareholder and Lender

Croatia

Zagreb Airport

December 2013

Equity: €19 million A Loan: €35 million

Pulkovo Airport

Lender and Arranger

Russia

April 2010

A/C Loan: $70 millionB loan: 100 million

Podgorica Bypass

Montenegro

December 2010

A Loan: $15 million

Lender

Samara Region

Lender

Russia

April 2013

A Loan: $65 million

Metropolitan Municipality of

IstanbulA Loan: €50 million

Turkey

September 2008Lender

Transport Transport

TransportTransportTransport

Subnational

Power

Power

Power Power Power

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TIMISOARA MUNICIPALITY (ROMANIA)IFC investment:

• EUR 35 million senior loan

• 12-year, 3 (?) years grace

• Repayment: from the general budget revenues of the Municipality

• Purpose: co-financing the Municipality’s priority investment program in the total amount of EUR 259

million across 32 projects supported by the EU. IFC co-financing focused on a subset of 17 projects

in sectors such as transportation, urban renewal, district heating, social infrastructure and IT & SME

support

Expected outcome:

Reduction in traffic related injuries and deaths

Increased safety, mobility, health and education of the local population

Supported local SMEs to stimulate private sector growth

CO2 emissions reduction by 450,000 tons per year

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IZMIR METROPOLITAN MUNICIPALITY (TURKEY)Izmir municipality: 3rd largest city in Turkey Population – 4 million Strong credit:

• BBB- credit rating (sovereign level)• Stable cash flows • Strong operating margins (over 40%)• Acceptable leverage

IFC role: Organizing 5 loans over 3 year period Total amount of financing organized by IFC:

• €148 million on own account• €126.5 million mobilization

Sea Transport

Traffic Management Wastewater Tramway Railcars Total

Year 2012-2013 2013 2013 2014 2014

IFC € 45 m € 28 m € 55 m € 20 m € 148 m

AFD € 45 m € 55 m € 20 m

EBRD € 33m € 38.5 m

ING (MIGA)

€ 33 m € 55 m € 38.5 m € 126.5 m

Total € 111 m € 45 m € 28 m € 165 m € 117 m € 274.5 m

Purpose: 5 large projects of critical importance to the city, including traffic management system, tramways, railcars and water / sanitation

Thank you!

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