miga. business oportunities emerging countries. spri-bilbao octubre 2013
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MIGA. Business Oportunities for Basque Enterprises. SPRI- Bilbao oCTUBRE 2013TRANSCRIPT
MIGA in Bilbao, Spain
September 30-October 1, 2013
maintaining FDI flows
in a risk-averse world
Olivier J. L. Lambert, MIGA Europe Office (Paris)
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 2
MIGA and the Basque Country
MIGA has guaranteed 48 projects of Spanish-based investors into developing
countries
Existing preliminary discussions with Basque Country investors:
� Applications received
� Iberdrola Ingenieria y Consultoria S.A.U for power project in Syria, 2005
� Idatrade for agribusiness and manufacturing projects in Ghana, 2004 and 2008
� Ikusi (Angel Iglesias S.A.) for services projects in Albania and Sudan, 2002 and 2003
MIGA explores business opportunities to:
� Increase support for the Basque Country’s private sector investments into
emerging countries
The International Finance
Corporation (IFC)
� Investment services for the
private sector
� Advisory Services for
companies and private
investors for questions
related to the private sector
� IFC Asset Management
Company
The World Bank Group
The Multilateral Investment
Guarantee Agency (MIGA)
� Guarantees against non-
commercial risks
� Dispute resolution services
for guaranteed investments
� The International Bank for
Reconstruction and
Development (IBRD)
� The International
Development Association
(IDA)
IBRD:
� Loans to middle-income
countries
� Advisory services
� Guarantees and risk
management
IDA:
� Donations and zero-interest
loans to least developed
countries
The International Center for
Settlement of Investment
Disputes
(ICSID)
� Specialized dispute
resolution institution
� Facilities for independent
conciliation and
arbitration of investor-
State disputes
� Enables individuals or
companies to bring up
claims against foreign
governments
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 4
1. Currency Transfer Restriction & Inconvertibility Cover� Protects against losses arising from inability to convert local currency into forex for transfer
outside the host country or transfer/excessive delays in acquiring forex
2. Expropriation Cover� Protects against losses arising from nationalization and confiscation; Creeping expropriation (e.g.
gradual changes in tax regime); Expropriation of funds (e.g. "account freeze” )
3. War and Civil Disturbance Cover� Protects against: Loss of Assets; Temporary or Permanent Loss of Use
� Loss has to be a direct and immediate result of acts of war, revolution, rebellion, insurrection,
coup d’état, civil war, civil commotion, riots ; acts of sabotage or terrorism can also be covered
4. Breach of Contract Cover� Protects against losses arising from the government’s breach or repudiation of a contract with the
investor (e.g., a concession or a power purchase agreement)
� Coverage extends to sub-sovereign risks, interest rate hedging instruments and capital market
transactions
5. Non-Honoring of Financial Obligations (NHFO) Cover� Protects against losses resulting from a government’s failure to make a payment when due under
an unconditional financial payment obligation or guarantee related to an eligible investment
� Since June 2013, a new cover: NHFO for SOEs that are: a) controlled by the State; b) performing a
public service or governmental function; c) creditworthy and financially viable.
MIGA Political Risk Insurance covers non commercial risks
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 5
Eligibility Criteria
Financial instruments covered
� Equity
� Shareholder loans
� Loan guaranties
� Non-shareholder loans (e.g. stand-alone debt) as long as they relate to a
investment/project with some form of direct investment
� Non-equity direct investment (e.g. management and turnkey contracts)
� Capital market transactions (no equity required)
Investments characteristics
� Cross-border from one member country (developed or developing) into a developing
member country
� Primarily “greenfield” investments but also existing investments since November 2010
Clients or Guarantee holders
� Investors
� Banks
� DFIs and other government agencies
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 6
Terms of Coverage
Amount of coverage
� MIGA can typically arrange cover for all amounts, either on its own books or through
co/reinsurance
� No minimum amount for guarantee or size of investment
� Amounts can include interest principal for debt and future retained earnings for equity
� Equity covered up to 90% (plus up to an additional 50% of the investment contribution to cover
earnings attributable to, and retained in, the project)
� Loans and Loans guaranties covered up to 95% of the principal (and up to 99% on a case-by-case
basis) plus up to an additional 150 percent of the principal to cover interest that accrues over the
term of the loan
Tenor
� Minimum 3 year (1 year for loans), up to 15 years (and possibly 20 years if justified by the nature
of the project); investor decides on the duration of a guarantee
Pricing
� Premium rates are decided on a per project basis and vary by country, sector, transaction and the
type of risk insured
� Premiums are paid annually or semi-annually and are calculated as a percentage rate applied to
the amount of coverage
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 7
MIGA’s Tailored Program for SMEs
MIGA’s Small Investment Program (SIP): Designed to facilitate investments into small
and medium-size enterprises with simple projects and involved in the finance, agribusiness,
manufacturing and services sectors
Eligibility: Fulfill two of the following three criteria:
� No more than 300 employees
� total assets not more than $15 million
� total annual sales not more than $15 million
Standardized package of risk coverage: Currency inconvertibility and transfer
restriction; expropriation; war, terrorism and civil disturbance
53 outstanding contracts for SIP projects (October 2012)
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 8
MIGA Value Proposition for Investors
KNOWLEDGE AND EXPERTISE
• Largest multilateral PRI provider
• 25 years in emerging markets
• Expert staff
• Access to World Bank Group
resources
• Best practice environmental and
social standards
UNIQUE PRI SOLUTIONS
� Support investments in difficult
markets
� Longer tenors (up to 20 years)
� May result in lower borrowing costs
� Reduce risk weighting and capital
provisioning
CLAIM DETERRENCE
� World Bank Group’s umbrella
� 177 member countries
� Claims track record
� Assistance in dispute resolution
FINANCIAL STRENGTH
� Recognized industry leader
� Strong balance sheet
� Diversified portfolio
� Implied AAA rating
� Reinsurance capacity
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 9
MIGA’s Claims Track Record
Highlights
� MIGA has supported more than 700 projects since inception
� MIGA has assisted clients in resolving more than 100 disputes
� MIGA has successfully facilitated the settlement of disputes in all currency transfer/
inconvertibility issues
Claims history
� MIGA has paid claims in six cases:
� Afghanistan, Nepal, Kenya and Madagascar (War and civil disturbance)
� Indonesia and Argentina (Expropriation)
� All other cases have been resolved or the claim withdrawn
� MIGA has never had a dispute with a client with regard to a claim
� In all these cases, MIGA has maintained good relationships with the Host Government
Deterrence effect & early involvement to resolve difficult / complex situations will ensure the
largest number of projects are successful
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 10
Investor� Marketing and origination
� Preliminary Application
MIGA
(3-6 months)
� Definitive Application
� Early Screening Project Review Meeting
(“ESM”)-chaired by the Director of Operations Group
� Underwriting and host country approval � Developmental impact
� Environmental, Social review
� Pricing and reinsurance
� Economic financial viability, country risk
� World Bank Group policy
� Project Review Committee (“PRC”)-Track “A”
projects (complex/high risk)
� Final Approval Meeting (“FAM”)-Track “B” projects
(simpler/low risk)
Investor
and MIGA
� Sign contract of guarantee
� Monitoring, evaluation, contract maintenance 3
2
Process and Structure: How Does it Work?
1• Available online
• Free, confidential
• 2 pages
• Determines eligibility
• More detailed analysis of a
project
• Fees due ($5k up,
depending on the type of
project)
• Starts underwriting
process
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 11
Bank
(Parent/Subsidiary)
Government or
Relevant HC Authority
Project
Enterprise/JV
Concession
Loan
Host Country
Home Country
Contractor
Foreign
Investor
Equity/
Shareholder
Loan
Infrastructure
Works
“Home Country” can be
holding company based
offshore in a MIGA member
country
Certain types of management
contracts, whose remuneration
depends on revenues or profits
of project, are eligible as
“equity”
Non-honoring of Sovereign
Guarantee possible if Project
Enterprise is PPP or JV w/ SOE and
Government provides unconditional
guarantee on loan
Standard Project Structure
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 12
SG-CBSG-CB
MoE/VRA/
Takoradi Power
Project
Contractors (CCC,
Magellan, HPI,
Orenda)
Contractors (CCC,
Magellan, HPI,
Orenda)
Ministry of
Finance
EPC
Contract
Subsidiary Loan
Agreement
Loan Agreement
Contract Payment Obligation
Canada
Ghana
Project examples:Coverage of a Sovereign Financial Obligation:
Takoradi 3 Power Plant in Ghana, 2012
� In February 2012 MIGA issued a guarantee of
$88.4 million to Société Générale Canada Branch
(SGCB) covering its loan to the government of
Ghana to finance the completion of the Takoradi
3 Power Plant
� The coverage is for a period of up to 15 years
against the risk of non-honoring of sovereign
financial obligations
� The project, located within the existing Takoradi
T1/T2 power plant complex in the Ghanaian
district of Sharma Ahanta East, will expand the
existing combined-cycle gas turbine power-
generation facility. The proposed expansion will
furnish power to the national grid during peak
demand and provide base load capacity in times
of low water levels when hydroelectric generation
is affected
NHSFO cover
risk
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 13
WestLB
Astaldi-Gulermak-
Makyol JV
Loan
Turkey
Municipality of
Istanbul
Funding
Kadikoy-Kartal-Kaynarca
Metro Project Construction
Ulasim
Ownership
Operator
NHSFO
cover
Ownership
Contract
Société
Générale
Société
Générale
Credit
Agricole
Credit
Agricole
BNP
Paribas
BNP
Paribas
UnicreditUnicredit INGING
Facility
Agent
� In April 2011 MIGA issued a guarantee of
$409.2 million for an investment by WestLB
AG London Branch, for itself and as agent
for a consortium of lenders, in the Kadikoy-
Kartal-Kaynarca Metro Project in Istanbul
� MIGA’s guarantee covers principal and
interest for a period of up to 9.5 years
against the risk of non-honoring of
sovereign financial obligations
� The project will be the first underground
metro system on the Asian side of Istanbul
and connect with the European side of city
Coverage of a Sub-sovereign Financial Obligation:
Kadikoy-Kartal-Kaynarca Metro in Istanbul, 2011
risk
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 14
� In June 2012 MIGA issued $145 million in
guarantees covering equity and loans from
Bouygues Travaux Publics (France) and Pan
African Infrastructure Development Fund
(South Africa), and loans from AFC (Nigeria),
BMCE Bank International (UK) and FMO
(Netherlands)
� MIGA’s coverage is for a period of 15 years
against the risks of transfer restriction,
expropriation, war and civil disturbance, and
breach of contract
� Investments support the design,
construction, and operation of the Henri
Konan Bédié Toll Bridge over the Ebrié
lagoon in Abidjan
Breach of Contract with a Sovereign:
Konan Bédié Bridge in Côte d’Ivoire, 2012
SOCOPRIM S.A.
Govt of
Cote
d’Ivoire
Bouygues, PAIDF,
AFC
Banque Nationale
d’Investissement
Total CI
AfDB, BOAD,
ECOWAS
Bouygues,
AFC PAIDF
FMO, BMCE,
AFC
Senior Multilateral
LendersSenior Lenders Junior LendersEquity Providers
Minimum
Revenue
Guarantee
Note: PAIDF = Pan African Infrastructure Development Fund; AFC = Africa Finance Corporation,
FMO = Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.; BMCE = BMCE
Bank International Plc
Cote d’Ivoire
BoC cover
risk
Concession
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 15
Small Investment Program
Bitaka S.A.,2011
� In December 2011, MIGA issued guarantees of €3.8m
($5.1m equivalent) to Fons Mediterrània Capital,
F.C.R. de Régimen Simplificado of Spain (FMC)
covering its equity investment and shareholder loan
in Bitaka S.A. (Bitaka) in Tunisia
� The coverage is for a period of up to 5 years against
the risks of transfer restriction, expropriation, and
war and civil disturbance
� Bitaka provides low-cost, innovative solutions to
mobile operators in Tunisia. The mobile sector is
mainly pre-paid and relies on payment solutions to
connect the majority of the population
� Indirectly the project contributes to the continued
growth of the mobile sector in Tunisia, which has an
impact on GDP growth (a 10 percentage point
increase in mobile penetration generates a 0.81
percentage-point increase in economic growth for
low and middle-income economies)
FMCFMC
Bitaka S.A.
Equity
investment
Shareholder
Loan
Spain
Tunisia
riskrisk
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 16
MIGA Highlights
Sector breakdown – FY13
Key Figures
� Supported more than 750 projects for a total of
$27.2 billion during FY90-12
� Portfolio: $10.76 billion in June 2013
� Issued record $2.8 billion guarantees in FY13
MIGA’s Strengths
� Subscribed capital and retained earnings: $ 2.5Bn
� Strong capital base and ability to pay
compensation in the event of large-scale losses
� Highly rated multilateral acknowledged by Basel II
5.15.4 5.3
7.37.7
FY05 FY06 FY07 FY08 FY09 FY10
6.5
9.1
FY11 FY12
10.3
FY13
10.8MIGA’s Gross Exposure (US$ billion)
1.46
1.89
2.562.78
Total new issuances by region – FY13
Thank You!
www.miga.org/emea
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 18
Contact Information
Europe Regional Office
Multilateral Investment Guarantee Agency
66 Avenue d'Iéna
75116 Paris France
www.miga.org/emea
Olivier J. L. Lambert, Manager
t. 33-1-4069-3158
I N S U R I N G I N V E S T M E N T S ���� E N S U R I N G O P P O R T U N I T I E S