ifc agribusiness department...ifc’s global reach 100+ country and regional advisory services...

IFC Agribusiness DepartmentDr. R. John Hatton

Senior Industry Specialist, IFC Agribusiness Department

OIE Conference, CairoOctober 2008

IFC Work to Support Implementation of Animal Welfare Standards

• IFC - An Overview

• IFC in the Agribusiness Sector

• IFC Livestock Investment Approach including Animal Welfare Standards

• Discussion

OIE Conference- October 2008 2

IFC – An Overview

IFC is a Member of the World Bank Group

IBRDInternational Bank for Reconstruction and Development

IDAInternational Development Association

IFCInternational

Finance Corporation

MIGAMultilateral

Investment and Guarantee Agency

To promote institutional, legal and regulatory reform

Governments of poorest countries with per capita income of less than $1,025

- Technical assistance- Interest Free Loans- Policy Advice

To promote private sector development

Private companies in member countries

- Equity/Quasi-Equity- Long-term Loans- Risk Management- Advisory Services

To reduce political investment risk

Foreign investors in member countries

- Political Risk Insurance

Est. 1956

Role:

Clients:

Products:

To promote institutional, legal and regulatory reform

Governments of member countries with per capita income between $1,025 and $6,055.

- Technical assistance- Loans- Policy Advice

Shared Mission: To Promote Economic Development and Reduce Poverty

Est. 1945 Est. 1960 Est. 1988


IFC’s Global Reach100+ country and regional advisory services offices worldwide

Hong Kong

Rio de Janeiro

IstanbulNew Delhi

Johannesburg

Washington

Moscow

Cairo

IFCHubsIFCOffices

Drawing on our experience and lessons-learned, we share sector best practices to the benefit of our clients.


IFC’s Products and ServicesSeniorDebt

StructuredFinance

MezzanineFinance

• Partial credit guarantees

• Securitization

• Bond underwriting

• Credit Enhancement

• Convertible debt

• Subordinated debt

• Other Tier II instruments

PrivateEquity

• Common shares

• Preferred shares

• On-lending

• Liquidity management

• Acquisition financing

• Warehousing facilities

• Syndicated loans

Global TradeFinance Program

• $1 billion program

• Guarantees to issuing banks

• 46 issuing banks in 24 countries

• 92 confirming banks in 62 countries

• $579 million of issued guarantees in first 12 months

SustainableFinance

• Carbon finance

• Renewable energy

• Supply chain financing

• Corporate governance

AdvisoryServices

• Corporate governance

• Risk management

• Small and medium business banking

• Housing finance

• Energy efficiency finance


IFC in the Agribusiness Sector

IFC Value Add in Agribusiness

Equity

Fixed/Floating Rates, Local Currencies

Up to 15 year Loan Maturity

Flexible Amortization Profile

Catalyst for other Investors and Lenders

Equity Participation

Capital Mobilization

Long-term Competitive Financing

40+ Years of Sector Expertise

Industry Specialist Advice and Benchmarks

Greenfield

Expansion/Modernization

Corporate Strategy

Access to International Investors

Global Sector Expertise

Government Relations

Neutral broker Role

Reduced Risk of Expropriation, Breach of Contract, Convertibility

World Bank Synergies

Witholding Tax Benefit

Advice on Environmental and Social Best Practices

Energy and Water Use Management / Cleaner Technologies

Equator Principles Modeled after IFC Standards

Local Consultation and Disclosure

Local Supplier Development

Environmental/ Social Advice

Corporate Governance

Local Economic Development

HIV/AIDS Prevention

Community Development Funding

Sustainability Toolkit

Environmental & Social Risk Management

Country Risk Mitigation

Regional Knowledge

Extensive Local Office Network

Local Transaction Experience

Strong bank partnerships through client networks and B loan participants

World Bank Synergies

Joint Venture partnership management

Regional Knowledge


Recent experience in livestock sectors

Pigs/PorkPigs/PorkPoultryPoultry Combination Livestock

Combination Livestock CattleCattle

$160 million

Suguna (India)Contract local suppliers with branded live bird sales kiosks

Wadi (Egypt)Breeding operations

Mironovsky (Ukraine)Broiler production, chilled distribution and retail operations

Halim (Korea)Largest fully integrated broiler producer in Korea

Stavropolskyi Broiler (Russia)Integrated production

$175 million $90 million$61 million

S. EuropeEstablish PS farms, feedmill, contract growing

Agrokor (Croatia)Rehabilitated pig and cattle farms post-privatization to ensure quality local meat supply

Zhengye-ADC (China)Introduce PS and GP stock of PIC pigs and develop local supply chain of breeders

Bertin (Brazil)Introduce sustainability and traceability best practices to Brazil’s leading beef and leather exporter

BGK (Russia)Double pig and poultry production, including expansion of feed mill operations

Banvit (Turkey)Double broiler raising operation; integrate beef raising

Pronaca (Ecuador)Pig slaughtering operation integration with broiler raising

Sadia & Perdigão(Brazil)Repeat debt & equity investments


Agribusiness Committed Portfolio

By Sector$2.2 Billion Committed Portfolio As Of June 30, 2008

By Region

Beverages10.2%

Sugar15.8%

Other8.6%

Other Food14.2%

Fruits & Vegetables

6.1%

Dairy Products

4.3%

Grains & Milling7.4%

Veg Fats & Oils

13.1%

Animal Processing

20.4%

S.Europe/ Cent. Asia

9.6%

Africa5.9%

South Asia6.5%

Mid. East/ N. Africa

1.9%

South America37.7%

Cent. America

6.7%

East Asia16.4%

Cent. & East.

Europe15.6%



Global Expertise: Sample of clients

Clients benefit from access to global expertiseand IFC network of clients

Turkey

Indonesia

South Africa

Peru

BrazilArgentina

Ecuador

India

Russia

Uruguay

China

Nicaragua

Ukraine

Egypt

Ghana

Mozambique

In PortfolioIn PipelinePast Client

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IFC Livestock Investment Approach including Animal

Welfare Standards

Pre-Appraisal

(Early Review)

• Client needs determined

• Assessment of project’s impacts and development contributions

• Policy Committee approval

• Mandate letter

Disclosure and Decision Making

• Disclosure of environmental and social information

• Opportunity for public comment

Monitoring IFC’s Project CycleApproval

and Disbursement

• Negotiation and agreement of principal terms

• Board approval

• Signing of legal documents

• Disbursement

Appraisal

(Due Diligence)

• Assessment of business opportunities and risks

• Analysis of environmental and social opportunities and risks

• Appraisal

• Credit Committee approval

Supervision

(Monitoring)

• Annual review of project performance

• Financial

• Environment & Social Report

• Ongoing reviews including possible site visits and technical guidance

We Agree on a Specific Timeline to Meet Client’s NeedsOIE Conference- October 2008 13

Pre-Appraisal: RSPCA’s 5 Freedoms

Freedom…• From hunger or thirst• From discomfort• From pain, injury or disease• To express normal behavior• From fear and distress


VEGAN System for Appraisal

ValuationEnvironmentGeneticsAnimal HealthNutrition

V -E -G -A -N -


MEGAN System for Appraisal

ManagementM -



ManagementEnvironment

M -E -



ManagementEnvironmentGenetics

M -E -G -



ManagementEnvironmentGeneticsAnimal Health

M -E -G -A -



ManagementEnvironmentGeneticsAnimal HealthNutrition

M -E -G -A -N -


Discussion


Thank You

Dr. R. John HattonSenior Industry Specialist,

IFC Agribusiness [email protected]


ifc agribusiness department...ifc’s global reach 100+ country and regional advisory services...

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