IFC Technology Group

Overview

July 1, 2009

2

Established in July 2000, investments in 64 companies to

date (21 closed or exited).

Only venture capital-focused entity within the IFC.

FY09 Investment program: US$106 million.

Active Portfolio: US$183 million committed to 29 companies,

10 Rights Issues.

13 Dedicated IT Investment Professionals (up from 8 in 2003).

Equivalent to operating a US$750 million technology fund

IFC Technology Group Overview

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

Technology Projects are a key component of CIT’s portfolio

Telecom

82%

Portfolio by Sector # of Projects

VC projects tend to be smaller in dollar value terms. Nevertheless, in terms of number of projects,

technology projects comprise almost 50% of our portfolio and require proportionally more work in

terms of portfolio management. 3

Loans ($m) Equity ($m) Total

Technology 31 151 183

Telecom 1,041 111 1,152

Total 1,073 262 1,335

# of ProjectsAvg Project Size

($m)

Technology 29 6

Telecom 41 28

Total 70 34

Technology14%

Telecom86%

Portfolio by Sector $ Volume

Technology41%

Telecom59%

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

IFC’s Technology Portfolio has been growing steadily

Portfolio Composition by Region

(in US$ millions)

Technology Portfolio Active Commitments FY09 (US$183 m in 29 companies)

Portfolio Composition – Debt vs. Equity

(in US$ millions)

Technology projects tend to be (quasi-) equity investments. Projects in East & South

Asia and Latin America comprise the bulk of our portfolio. 4

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

Sub-Saharan Africa

Central & Eastern Europe

Latin America & Caribbean

Middle East & North Africa

East Asia & Pacific

Southern Europe &

Central Asia

South Asia

Equity

Quasi-Equity

Loan

Quasi-Loan

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VC practice established in year 2000, at the height of Internet-IT bubble.

Investing in start-ups proved unsuccessful due to limited expertise and

resources required for active management of portfolio companies.

High valuations for IT companies.

Technology Strategy

Take on execution risk instead of technology risk, by investing in established companies

Find investments that address emerging markets challenges, e.g. mobile banking.

Partner with leading local, global VCs, industry experts and strategic investors.

Focused strategy with dedicated efforts in LAC, China, India and Russia. Opportunistic

approach towards other countries.

Wholesale approach for startups in BRIC countries by investing in early stage VC funds.

Starting to make cleantech investments in BRIC countries, opportunistically looking at IDA.

Grow expertise and serve IFC as ‘Center of Expertise’ on equity investments.

Leverage IFC domain expertise (telecom, cleantech, financial sector, health &

education, etc.).

Continue to increase group size and local presence by moving staff to the field.

Broaden efforts to include Sub-Saharan Africa, MENA & emerging Europe.

Past

Present

Future

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

6

Current Technology Sector Focus

IT Enabled Business

IT Infrastructure– Climate change through Green IT (EDC China, Asteros Russia, Metronet Mexico, Trimax India)

Software – Leverage IFC domain expertise, e.g. telecommunications/ banking (Lifetree & Connectiva)

IT-enabled Services –Outsourcing (Hisoft, KPIT)

Payment Technology

Mobile Banking –Demonstrable development impact (Wizzit)

Payment gateway – Enabling SME businesses (Dineromail)

eGov – Transparency and reduction of corruption (Chinasoft, Sonda)

Cleantech

Renewable energies – e.g. solar, wind (Sunpreme, Azure)

Waste water treatment (Grant)

Solid waste treatment (Atieva)

Energy efficiency via technological innovation (Shuoren China)

Battery/power management

Adaptive technologies entering new markets

IFC Technology Group focuses on 3 practice groups:

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

7

Investment Size – Ideal project size is US$5-25 million; typically IFC is not the first investor to

enter but leads later financing rounds.

Revenue Traction – Focus on companies with realized revenue traction; >US$ 10 million.

Growth Equity – Look for execution risk, not technology risk. Focus on companies with

established products and customers, usually EBITDA positive companies that need money to

grow business (e.g. Sonda, Chinasoft, EDC, Lifetree India, Asteros). Use wholesale fund

investment approach for early stage (SBCVC China, China Environment Fund, Horizon South

Africa, iLabs India).

Clear IFC Role – Select high development impact projects where IFC additionality and

differentiation from private sector players is clear.

Partner with value-added co-investors – Co-lead deals with global VC/PE funds, strategic

investors (e.g. Intel, Microsoft, Qualcomm, Motorola) and strong local investors (e.g. China

Environment Fund, Kotak, Sequoia Capital, Actis).

BRIC vs. non-BRIC – Learn about technologies in BRIC countries that can be moved

overseas – either with a project company or via other projects. Take on more risk in non-BRIC

countries: US$ exposure can be lower; IFC role is to support emerging IT sector.

VC Investment Criteria

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

8

IT Enabled Business Industry Overview

IT Services

Software

IT Infrastructure

Hardware

Telecom Equipment

Semiconductors

Internet

Niche Sectors

IT Outsourcing

Contact

Center/BPO

IT Management

Consulting

System

Integration

Enterprise

Applications

Communications

Middleware Integration

Utilities

Networking & Internet

PC Business Software

Consumer &

Entertainment

Datacenters/

BCDR

Internet Service

Providers

Application

Service Providers

Managed Service

Providers

PC Assesmblers

PC Components

Communications

devices

Wireline

Wireless

Semiconductor

Manufacturers

Semiconductor

Capital Equipment

Content,

eCommerce,

Portals, B2B, B2C,

Web 2.0

E-Gov

Cleantech

Distance

Learning

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

Payments is an industry under “attack”

Telcos: the largest base network; most convenient processing device – mobile phones

Prepaid airtime: the most reliable and pervasive payment product; no regulatory

hurdle; low barrier to entry;

Prepaid Debit: the most aggressively expanding product in the world;

From Government: Government is the largest payer in a country

Loyalty/Transport: and any large community (Skype for example and soon Facebook??)

Technology (classic): Providers of core switching technology that venture into retail

access.

Remittances: Western Union, MoneyGram, Money Express.

Banks: believe this is their natural territory and want to extend their services

E-Commerce Payments:

9

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

Payment Business Models

10

Wizzit DineroMail Pagatodo(Similar to EuroNet)

Net1 GreenDot

Core

business:

Provides clients with

branchless banking

services through the

cell phone

Provides pre-paid

debit accounts to

internet users; allows

merchants to receive

payments for goods

sold on the internet;

clients to pay using

debit accounts

Distributes pre-paid

airtime and

government benefits

through stored value

cards taking

advantage of using

owned and managed

POS network.

Distributes

government benefits

and pensions through

its own payment

infrastructure, POS,

ATMs.

Distributes and

processes stored-

value cards

redeemable at select

retailers who

participate in the

scheme.

Revenue

Model:

Transaction fees +

commissions on

merchandise sold

Processing fees /

commissions paid by

merchants

Commissions on

airtime and

processing fees on

government

distributions

Processing fees Processing fees /

float?

Processing

Terminals:

Mobile phones;

ATMs; POS-s

E-POS POS terminals ATMs, POS terminals,

stored value cards

POS terminals of

merchants; stored

value cards

Source of

Electronic

Funds

Deposits made

through retail partners

(post office, banks,

retailers)

Deposits made

through retail partners

(post office, banks,

retailers)

Government; MNO Government Deposits made

through retail partners

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

IFC investment Thesis in Payment

Why is there an opportunity?

The payments industry is undergoing a major paradigm shift exhibited as

an architectural change from dormant hub-and-spoke, highly-regulated

monopolies, to retail-focused, client-facing agile operations. The result is

increased competition for the end user, irrespective of its position in the

social pyramid and a proliferation of payment services offerings.

How will this industry mature?

When the initial foray ends, and after a wave of consolidations, the

winners will have gained a client base that is difficult to disintermediate or

redistribute, and a network of enormous financial value.

Why does IFC get involved?

The development of ubiquitous retail payment networks is heralding the

age of dominance of electronic payments and electronic money and is

opening the world of financial services to the poor, much the same way

cell phone technology opened the communications world to them.

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Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

12

Focus on commercialization stage

and collaboration across IFC in cleantech

Investor

profile

Risk profile

Deal size

Investment

risk

Angel investors,

friends/family

Very high,

Speculative

< US$ 3 mm

Technology risk,

very limited exits

Venture Capital

High

US$ 1- 20 mm

Market, execution and

exit risks

Late stage VCs, PE,

some debt investors

Medium

US$ 10-100 mm

Market & execution risks

PE, debt investors,

public markets

Low

> US$ 30 mm

Pricing, M&A, margins

IFC

investment

instrument

Grant or

Preferred equityPreferred equity

Preferred & common

equity, mezz and debtCommon equity & debt

IFC Depts

Technology Group to focus on early stage cleantech investment deals through Joint Ventures

Incubation Early-stage Growth Mature

CIT + CES + JVs

Donor Cleantech facility

CGM, CIN, CAG, CFN,

COC, CTF + CIT JVs

CGM, CIN, CAG, CFN,

COC, CTFInfodev + CES

Technology

Group focus

Limited,

select Joint Ventures

Limited, perhaps

Cleantech facility

Key Focus Area, facility to

enhance IDA/Africa, JVsNot likely

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech

13

Complement industry departments with early-stage

investment expertise, knowledge management in cleantech

Note: * Especially market transformation initiatives, risk sharing facilities

CES

Environmental

Domain

expertise

CAS, A2F

ESS BL*

Donors (GEF, CTF)

Industry

departments

Joint

Ventures

Source of industry and

domain specific

expertise

Growth to late-stage

investments

Typical examples:

Large scale roll-out of

Wind, Solar, Water,

Geothermal, Biofuels

Transportation

Large scale CO2 Seq.

Sustainable agriculture

Green building design

and systems

Carbon financing

Single point of contact

for any Cleantech

investment

Early stage and some

selected growth-stage

investments

Typical examples:

Smart IT systems,

Green datacenters

Electronic recycling,

E-waste management

Energy Storage

Energy efficiency via

technological innovation

Adaptive technologies

entering new markets

Early-stage

investment expertise

Specific Industry

Domain expertise

CGF

COC

CIN

CFN

CAG

CGM

Technology

Group

(CIT)

Technical

assistance

GICT Infodev

Network of

150

Incubators

Infra-ventures

Facilities

Industry DepartmentsTechnology Group

(CIT)

Group

Overview

Payment

Technology

IT Enabled

BusinessCleantech