ifc - anil chandramani.pdf

Anil ChandramaniChief Investment Officer and Global Sector Lead, Chemicals & Fertilizers

1

Managing Risks & Industry Challenges

To Deliver Sustainable Growth

in the

Global Fertilizer Industry

Nitrogen + Syngas 2015Istanbul, TurkeyFebruary 23-26, 2015

The World Bank Group and IFC

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

- Short-term Finance

- Risk Management

- Advisory Services

To reduce political

investment risk

Foreign investors in

member countries

- Political Risk Insurance

Est. 1945 Est. 1960Est. 1956 Est. 1988

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

Private Sector Support Public Sector Support

2

The Mission of IFC is to promote private sector investment in developing countries to reduce poverty and improve people's lives

Holding $50Bn Portfolio

IFC in FY14

S&P, Moodys AAA

Committed 2014 $22.4 billion- Syndicated $5.1 billion- Own Account $17.3 billion

# of projects 599# of countries 98

Committed Portfolio (IFC balance) by region

Committed Portfolio (IFC balance) by sector

* Manufacturing includes the following subsectors: Chemicals/Petrochemicals, Construction Materials and Energy Efficient Machinery

Largest multilateral source of loan and equity financing for the private sector in emerging markets

Takes market risk with no sovereign guarantees

Promoter of environmental, social, and corporate governance standards

Resources and know-how of a global development bank + flexibility of a merchant bank

Portfolio of over 2,000 companies worldwide

Holds equity and quasi-equity in over 800 companies worldwide: Honest Broker Role

Loans may be foreign currency or, in several countries, may be in local currency

Manufacturing,

Agribusiness

and Services

29%

Financial

Markets

43%

Infrastructure

and Natural

Resources

28%

East Asia and

the Pacific

14%

Europe and

Central Asia

21%

Latin America

and the

Caribbean

21%Middle East and

North Africa

10%

South Asia

11%

Sub-Saharan

Africa

15%

RoW

8%

3

US$6.5 billions invested (own

account)

308 projects

53 countries

Chemicals & Fertilizers Sector

Key Features (historical)

Key Features (historical)

Committed Amount by Sector

In-house industry specialists with global experience in

the sector and benchmarking capabilities

Strong regional knowledge with exclusive focus on

emerging markets

Climate change strategy

Promotion of sustainable economic growth and

competitiveness with creation of direct and indirect

jobs, know-how transfer

Committed Amount by Region

4

Investments of about $1 Bn in FY14 in the IndustryInvestments of about $1 Bn in FY14 in the Industry

5Fertilizer Sector Strategic Sector for IFCIFC remained active in project finance in the Chemicals sector throughout the crisis

and closed deals during the most difficult periods of the financial markets.

652561

496 502420

596

782885 882

947 932818

61

5232 27

26

53

128

171 203

267376

533

FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY10 FY11 FY12

Fertilizers

Chemicals

Committed Exposure ($ Million)

Chemicals & Fertilizers Sector

5

Engro Corporate, PakistanICS, Senegal: phosphoric acidIndo Jordan, Jordan: phosphoric acidEngro Chemicals, Pakistan: ammoniaTrigen II, Trinidad & Tobago: ammoniaFosfertil, Brazil: SSP, TSP, MSP, DAPGNFC, India: ammonia, ureaDeepak Nitrate, India: ammonia,Urea,DAPPQB, Bolivia: ammonium nitrateKuAz, Russia: ammonia, ureaIndo Egyptian, Egypt: phosphoric acidKoyo, China: ammonia, ureaAbocol, Colombia: ammonium nitrate,NPKJIFCO, Jordan: DAPJPMC, Jordan: phosphateEngro Emergency, Pakistan: ureaOCI Egypt: Corporate loan for fertilizersParadeep Phosphates, India: DAPItafos Brazil: PhosRock & Acid

A Sample of IFCs Industry Experience

ERC Refinery, EgyptPSPC (Shell), PhilippinesStar Petroleum (Caltex), ThailandRefisan (Pecom), ArgentinaPetrotel-Lukoil, RomaniaAlliance Oil Company, Russia

Refineries

Petrochemicals

Continental Carbon of India Ltd.NPC, Thailand: gas crackerCopesul, Brazil: naptha crackerCopene, Brazil: naptha crackerSamsung, Korea: petrochem/aromatics

complex restructuringHMC Polymers, Thailand: PPPetroken, Argentina: PPPoliteno, Brazil: PEIpiranga I & II, Brazil: PE, PP Indelpro, MexicoProfalca, Venezuela: PPGrupo Zuliano, Venezuela: petrochem complexSuzhou, China: PVCVinythai, Thailand: PVCEngro PVC, Pakistan: PVCTuntex, Thailand: PTARhodiaco, Brazil: PTARhodia-ster, Brazil: PTA/PETOxiteno, Brazil: EO/MEG Girsa, Mexico: EO/MEGPralca, Venezuela: MEGGidesa, Mxico: EG, PSTrikem, Brazil: PSInnova, Brazil: styrene/PSDaaboul, Syria: LABJose Methanol, Venezuela: methanolKuAz, Russia: caprolactamEleme Petrochemicals, Nigeria: PE, PPXinao, China: Coal-to-DMEDCM Shiram, India: PVCHimadri, India: Carbon Pitch, carbon blackGalaxy Chemicals, India: SurfactantsEIPET, Egypt: PET

Others/InfrastructureFertilizers

Inorganic Chemicals

Engro Polymers, PakistanKanoria Vizag, IndiaAtul Ltd, IndiaAlexandria Carbon Black, Egypt: Carbon blackContinental Carbon (CCIL), India: Carbon BlackMaanshan I & II, China: Carbon blackRain Calcining, India: calcined carbonPeroxythai, Thailand: hydrogen peroxideChengdu, China: potassium hydroxide & PVCProdesal, Colombia: caustic soda, chlorineMeghmani Finechem, India: ChlorAlkaliMagadi Soda, Kenya: soda ashLukovac Soda, Bosnia: soda ashKanoria Chemicals, India: ChlorAlkaliJiuda Salt, China: industrial salt

JPMC Terminal, JordanIFC / SCB FacilityEngro Vopak, Pakistan: Chemical terminalMesser, Trinidad & Tobago: industrial gasesOpet Petrolculuk, Turkey: fuel distributionAntai, China: metallurgical cokeEcogreen I & II, Indonesia: oleochemicalsDarong, China: specialty chemicalsUPL, India: pesticides, herbicidesGapco, Kenya: storage terminalZhong Chen, China: storage terminalGalnaftogaz, Ukraine: petroleum retailerDongyue, China: fluorine chemicals,

organicsiliconeAtul, India: Dye and pesticide intermediatesHikal, India: PharmaceuticalsVinati Organics (JV), India: specialty chemicals

6

7An Integrated Approach to Risk Management

Mobilization incl. Cooperation

Agreement with Multilaterals

Sustainability Services

& Support

Short Term Customer

Financing and Supplier Financing

Both Equity and Debt Financing. Long Term

Risk Management / Political risk Mitigation

World Bank Synergies / Economic Analysis

Global IndustryExpertise

IFCs Value Proposition: How IFC can help you

All Economics Is Driven By Politics

IFC Chemicals 8

Italy

What if this heavyweight takes too long to get in

shape?

Portugal 2013

Greece Political Turmoil:

Inconclusive general election Mainstream pro-

Europe parties lose support and anti-austerity groups increased share of

the vote.

Political Risk: Far Away Issues Also Impact Us

Porque Debemos Sair do Euro (Why We Should Leave The Euro) by

Professor Joo Ferreira do Amaral

Where is

France Going Does

anyone know?

?

?

US: Playing Political Games With No Rules

Presentation Title 9

The New Normal : Shut the government down and flirt with debt default every 3

months?

Prospect of prolonged and frequent fights on Capitol Hill

The next political crisis is always just a few weeks away !!

China: Yuan versus Dollar

IFC Chemicals 10

Source: IMF, SEI

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The Asian Giants: China and Japan

BOJs twin aims generating inflation and bringing down yields

may be somewhat contradictory

Bank of Japan

Due to economical & political instability

Volatility has been Increasing

IFC Chemicals 11Source: IMF

Emerging Markets are driving global growth. All Companies are increasingly focusing on EM.

12

-1

0

1

2

3

4

5

6

Historical and Forecast GDP Growth

Source: IMF

-6

-4

-2

0

2

4

6

8

10

2

0

0

0

2

0

0

1

2

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2

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6

2

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2

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8

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9

2

0

1

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7

World

Advanced economies

Emerging and developing economies

Economic Insights: We know Emerging Markets

As a member of the World Bank Group, IFC has unparalleled insights into Emerging Markets.

MIGA: Multilateral Investment Guarantee Agency

Umbrella of deterrence

MIGAs Shareholders are the same as the Host Countries of investments

Only a small proportion of MIGA-supported projects encounter difficulties

MIGA guarantees provide downside protection on long-

term investments

Equity covered up to 90%; Debt covered up to 95%

Tenor covered up to 15-20 years

13

Political (Country) Risk Insurance

Currency

Transfer

Restriction and

Inconvertibility

Expropriation War and Civil

Disturbance

Breach of

Contract

Coverage

Guarantee holder can pick any combinations of coverage

Non Honoring of

Sovereign

Obligations

Facilitation of settlement of disputes

Host Country is motivated to find a solution

Project sponsors and financiers have a vested interest in continued success of project

5 claims paid out of 980 guarantees for total of 616 projects since 1990

MIGAs Risk Mitigation Solutions

14

Phosphatic Fertilizers : An example

Source: Fertilizer International, Deutsche Bank

Volume growth is volatile and pricing is often lagged to volumes

Cyclicality: we have to live with it

Counter-Cyclical Role: AAA-rated

IFC has committed over $6.0 billion of local currency loans in a variety of currencies since 1999

(31 currencies currently available)

15For more information see Annex 3

Local and Foreign Currency capabilities

16

Priorities Innovation hot spotsIFC Cleantech Clients

Clean energy & access

1 Solar

Industrial efficiency

3

Sustainable urbanization

2

Agriculture, water, and

forestry4

Water

Energy storage Biomass

Green Buildings

Water Energy storage

Energy efficiency

Waste

Biomass Energy efficiency

Biomass Energy efficiency

IFC holds an annual Cleantech Workshop which is attended by 150 investors, companies, and IFC

staff to exchange ideas on innovation

IFC has also committed US$254 million in

12 climate funds

IFC has also committed US$254 million in

12 climate funds

IFC is pushing innovation via its new direct venture/growth capital investment program (US$136 million committed since 2009)

Strong Equity Track-Record: Different fromPE

17

0

50

100

150

200

250

300

350

400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010North America Latin America

Western Europe Central and Eastern Europe

Africa and Middle East Asia Pacific

Historical Global Chemical Capital Spending

(billions of dollars)

2010 Global Chemical Capital Spending and

as % of regional shipments

(billions of dollars)

Fertilizer Plant (Amonia, Urea) costs $1-2bn

A new Refinery costs $5-8bn, while a Polyethylene Plant

costs $2-4bn

2010 Capex was around $247bn in 2010

-20%

-10%

0%

10%

20%

30%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Growth Global Capital Spending Growth Global Shipments

0

50

100

150

200

250

300

350

400

Central and

Eastern

Europe

Latin America Africa and

Middle East

North

America

Western

Europe

Asia Pacific

19%

5%4%13%4%7%

Capital Spending vs. Shipments Growth

(%)

Include Pharmaceuticals

The Fertilizer Industry is Capital Intensive

Long term player On both debt and equity sides

IFC would enter into Risk Sharing Agreements (RSAs) with one local banks in each

country, selected jointly by Client Company and IFC. Under each RSA, IFC would

share losses with the Bank on its portfolio of financings to Clients distributors

and/or farmers in that emerging market, typically on a pro-rata and pari-passu basis.

Under a separate Framework Agreement between Client and IFC, Client would

provide a pooled first loss cover and reimburse IFC for its payments under the RSAs,

up to a maximum cap to be agreed between them(First Loss Amount).

Structures of individual RSAs can vary, depending on each banks requirements and

each target portfolio.18

Short Term Finance: Crisis Mitigation

Bank 2

Country 2IFCIFC Client

Company

FarmerFarmerFarmerFarmerFarmerFarmer

FarmerFarmerFarmerFarmerFarmerFarmer

DistributorDistributorDistributorDistributorDistributorDistributor

Bank 1

Country 1

Bank 3

Country 3

Global

Framework

Agreement

RSA

RSA

RSA

Risk Sharing Facilities

19

B-Loans & Parallel Loans

A loan is for IFCs own account

B loan is for account of participant commercial banks

Only one loan agreement, signed by the borrower and IFC

IFC is the lender of record for the entire loan (A+B)

IFC Loans exempt from withholding tax

Participants

IFCBorrower

Loan Agreement

A + B Loans

B LoanParticipation

Agreement

1. Calyon

2. Cordiant Capital

3. Citigroup

4. ING Bank

5. ABN AMRO

6. BayernLB

7. Societe Generale

8. HSBC

9. Natixis

10. KBC Finance Ireland

Top 10 IFC B-Loan Participants

IFC Mobilizes Others: Lenders & Equity Investors (AMC)

20

In-house Technical and Market Expertise

Resource Efficiency (REF) in the Nitrogen Industry: Value-Add for the Sector and Countering Climate Change

21

Importance:

Investment demand worldwide:

Nitrogen-based chemicals and fertilizer industry has significant investment demand (~US$ 20 million per site)

Food Security:

Nitrogen-based chemicals and fertilizers are used extensively in agriculture worldwide (~50% of agricultural produce)

Energy Efficiency and Climate Change:

Fertilizer producers consume significant volumes of energy (natural gas) and emit significant volumes of greenhouse gases (~ 2-3% globally)

One must measure REF performance to identify areas for improvements in a companys operations and to support an informed investment decision

BENCHMARKING

The Global Economy is Highly Volatile

The Global and now European Financial Crises shook us

out of complacency.

The world continues to change dramatically.

It is Very Important to Understand and Manage Risks

Let your risk capabilities drive your strategy.

IFCs mandate is to Builds Partnerships to Share Its Expertise to Supplement

Risk Management Capabilities of Companies, so they can Enhance Competitiveness

and Build Leadership positions. 22

23

IFC Value Add: Tailored To Each Customer

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

50 Years of Sector Expertise

Greenfield

Expansion/Modernization

Corporate Strategy

Access to International Investors

Technical Advice

Advice on Environmental and Social Best Practices

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

GlobalChemicalsExpertise

Long-term Competitive Financing

23

Government Relations: 184 Finance Ministries form IFCs BoD

Neutral broker Role

Reduced Risk of Expropriation, Breach of Contract, Convertibility

World Bank Synergies

Withholding Tax Benefit

Partnership with MIGA

Country Risk Mitigation

Extensive Local Office Network

Local Transaction Experience

World Bank Synergies

Regional Knowledge

In Summary

24

How We Finance Projects

Umbrella for participants in IFCs syndication program: IFC lender of

record, immunity from taxation and provisioning requirements.

IFCs total financing must be less than 25% of total company

capitalization, and IFC does not manage or own largest stake.

Project Type IFC Investment

Greenfield, total cost

less than $50 million

Greenfield, total cost

more than $50 million

Expansion or rehabilitation

Greenfield, expansion,

rehabilitation

Up to 35% of project cost

for IFCs account


for IFCs account


for IFCs account

100% project cost for IFC

and participating banks

accounts

25

IFCs Works With A Broad Array Of Products and ServicesSeniorDebt

Global TradeFinance Program

StructuredFinance

MezzanineFinance

PrivateEquity

On-lending

Liquidity management

Acquisition financing

Warehousing facilities

Syndicated loans

Partial credit guarantees

Securitization

Bond underwriting

Credit Enhancement

Convertible debt

Subordinated debt

Other Tier II instruments

Common shares

Preferred shares

$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

AdvisoryServices

Corporate governance

Risk management

Small and medium business banking

Housing finance

Energy efficiency finance

Privatization

SustainableFinance

Carbon finance

Renewable energy

Supply chain financing

Corporate governance financing

26

Approaching IFC

Foreign or Domestic Sponsors

New venture or expansion; private sector majority ownership only

Project must be developmentally sound and commercially viable

Sponsor Commitment is Required

Equity participation; pre-completion support/guarantees

Submit Preliminary Business Plan or Feasibility Study

Brief project description, incl. technical feasibility and market study

Information on sponsors and operator

Environmental studies

Information on requirements, financing plan and cash flow projections

27

IFCs Project Cycle

Early Review

Client needs determined

Contribution of project to development assessed

Project screened for potential risks & issues

Site visit

Mandate letter

Due Diligence Negotiation DisclosureInternal

Approvals and Commitment

Disbursement

Assessment of business potential, risks, opportunities

Financial and economic Evaluation

Compliance with IFCs social and environmental performance standards reviewed

Terms and conditions of the IFC investment

Action plan agreed

Environmental and social information disclosed

Opportunity for public comment

Board consideration

Board approval

Legal review

Signing of legal documents

Fulfillment of conditions of disbursement

IFC funds disbursed

We Agree on a Specific Timeline to Meet Clients Needs

28

INTERNATIONAL FINANCE CORPORATION

Anil ChandramaniChief Investment Officer &

Global Sector Lead, Chemicals & FertilizersWashington DC

Phone: +1-202-473-4081Cell Phone: +1 202 830 8398

E-mail: [email protected]

ANNEX - 1

IFCs Focus on Sustainable Development & the Environment


30

The World Bank President, Dr. Jim Kim .

I have to tell you that the data that Im seeing about changes that are

happening today that we didnt think would

happen for three or four years ... this is extremely

disturbing to me, and I think we have to put the science of climate change

in front of all of our member countries,

And I guarantee you that I will do that.

Note: Comments were made in September 2012.

The private sector is crucial in testing and taking

to market green, clean alternatives on a massive

scale

I commit the World Bank to continue to be everyones

partner in taking the agenda forward.

Sustainable and Climate Friendly Development is Key

1. Strengthening the focus on frontier markets (IDA countries, fragile situations,

and frontier regions in non-IDA countries)

2. Addressing climate change, and ensuring environmental

and social sustainability

3. Addressing constraints to private sector growth in infrastructure, including

water; health, education and food supply chain

4. Developing local financial markets through institution-building, the use of

innovative financial products and mobilization, focusing on micro, small and

medium enterprises

5. Building and maintaining long-term client relationships with firms in

developing countries, using the full range of IFCs products and services, and

assisting their cross-border growth

Sustainability is one of IFCs Strategic Focus Areas

ENERGY: Low carbon generation, energy efficiency, storage, smart grids, sustainable energy access

TRANSPORTATION: Energy efficient components, fuels and

logistics

WATER: Capture, treatment, conservation, wastewater

treatment, access

AIR & ENVIRONMENT: Carbon credits, trading and offsets

BUILDINGS: Low carbon strategy, energy efficiency, sustainable

materials.

MANUFACTURING: Green chemicals, RE/EE supply chain, cleaner

production.

AGRICULTURE & FORESTRY: Land mgmt, low carbon and adaptation

strategies, biomass.

RECYCLING & WASTE: Recycling and waste treatment services

Climate business will scale up and have impact only with significant private sector participation that is where IFC has an important role to play

Climate business will scale up and have impact only with significant private sector participation that is where IFC has an important role to play

How does IFC define Sustainability?

Solutions for Climate Mitigation / Adaptation and Sustainable Development

IFC Chemicals 32

Resource Efficiency Has Become A Business Imperative

33

increase in real commodity prices since 2000147%

3 billionmore middle class consumers by 2030 rise in steel

demand by 2030

80%

global water demand exceeding supply by 2030

40%

Source: McKinsey: Resource Revolution

34

IFC has a Climate Change Department

Thought Leadership

Methodologies for setting and monitoring climate goals and standards across all sectors GHG intensity accounting, impact assessment and efficiency guidelines Capacity building for private and public clients related to climate business/policy Engagement with DFIs, institutional investors, academia and civil society

Business Opportunities

Support IFC investments with global knowledge and technical expertise

Develop scalable climate business models

Invest in new and transferable technologies

Develop relations with global and local climate technology companies

Stay abreast with climate-related business solutions and markets

FinancialInnovation

Leverage and adapt existing financial products (e.g., CDG)

Develop new innovative financial products

Develop efficient mechanisms to leverage public funds with private investment: tap into new climate finance

Scale up through intermediation with financial institutions and funds

To coordinate its work to address climate change, IFC established in 2010 a dedicated department, focused on helping to grow climate related business to 20% of

annual commitments by 2015.

Act Differently:Increase The Pace Of Innovation And Penetration

35

Many climate smart technologies are already financially viable

Source: World Development Report 201035

Recent Climate Projects in Manufacturing

India: CPLF Himadri (high efficient fire heaters; waste heat recovery units; economizer for air pre-heaters and water heat exchange) - US$5M

Vietnam:CCL Products (biomass boiler)US$0.4M

Mexico:Artha Capital (green building) -US$25M

South Africa:Karsten Farms (solar water heaters, EE lighting and upgrading refrigerationUS$0.9M

Jordan:JIFCO (steam generation based on sulfur combustion)US$5.6M

Balkans:Scholz Balkans (metal scrap recycling) -US$23.3M

Note (*) financing for climate friendly project; was part of a larger total IFC investment

China:Lattice Power (LED chips) -US$17.5M

Beijing Shenwu (HTAC) -US$22.8M

Microvast (advanced batteries/ energy storage) -US$12.5M

Brazil:Vonpar Alimentos(energy and water efficiency gains)US$10.8M

Thailand:Conti Auto (energy efficient generation diesel engines) -US$47.1M

Serbia:Vino Zupa (Energy Efficient Biomass boiler) - US$1.3M

Bulgaria:Stomana III (energy efficient electric arc furnace) - US$10M

Ecuador:Favorita WC (biomass boiler)US$0.4M

Russia:ZAO Energomera(new generation meters) - US$6.6MIdavang (energy savings) - US$8.7M

IFC Chemicals 36

Increasing resource efficiency (REF) in nitrogen industry

REF BENCHMARKING OF NITROGEN CHEMICALS AND FERTILIZER PRODUCTION

ECA Resource Efficiency

Program

February 14, 2015

Annex- 2

Resource efficiency in nitrogen industry: value-add For the sector and climate change agenda

38

Importance:

Investment demand worldwide:

- nitrogen-based chemicals and fertilizer industry has significant investment demand (~US$ 20 million per site)

Food Security:

-nitrogen-based chemicals and fertilizers are used extensively in agriculture worldwide (~50% of agricultural produce)

Energy Efficiency and Climate Change:

-fertilizer producers consume significant volumes of energy (natural gas) and generate significant volumes of greenhouse gas emissions (~ 2-3% globally)

One must measure REF performance to identify areas for improvements in a companys operations and to support an informed investment decision

BENCHMARKING

Measure and compare

- Measure plants performance and compare it to peers and global benchmarks

- Identify best practice standards (Environmental and Social)

Diagnose issues

- Identify areas for improvement

- Quantify overall performance improvement potential

Identify possible

interventions

- Learn about a range of options for improvement

- Quantify improvement potential from specific options

Receive specifications

of intervention

- Learn about options for improvement for your plant

- Assess feasibility of specific options

Investment decision and

support

- Decision to implement intervention

- Potential funding support from IFC or partners (to be discussed separately)

WHATS IN IT FOR COMPANIES?

ENABLING INVESTMENTS INTO RESOURCE EFFICIENCY

Sept-Dec 2014

Q1-Q2 2015 Q3 2015 Q4 2015

REF benchmarking methodology development

and stakeholders engagement

Companies engagement

(signing Mandate

Letters) and data collection in ECA region

Individual assessment reports and

regional benchmarking

report

Rollout to other regions globally

TIMELINE

40

TIME TO ENGAGE NOW NOT TO MISS THE OPPORTUNITY

HOW TO PARTICIPATE & BENEFIT FROMIN THE STUDY?

Please contact:

Viktoryia Menkova, Task Lead

[email protected] tel: +7 925 269 2014

Viera Feckova, Program Manager

[email protected] tel: +7 916 815 4412

ANNEX- 3

Select IFC Investments in the Fertilizer Industry Worldwide

Select IFC Investments in Turkey & the region


Select IFC Financed Fertilizer / Agrochem Projects

Brazil

Itafos / MBAC

A Loan US$40m, Equity US$35 (MBAC)

Development and growth of an integrated SSP produce

Senior Lender and InvestorSingle Superphosphate (SSP)

US$70m Risk Sharing Facility

Bayer Ukraine Ltd.

Ukraine

Crop protection

Dazhou Koyo

Equity Investor and Senior Lender

China

Project Loan-$20mmEquity Investment-$10mm

Greenfield ammonia/urea plant

India

Paradeep

A Loan US$50MM

DAP, NPK Expansion

Senior LenderPhosphate

Egypt

Orascom (OCI)A Loan $200MM, B Loan $125mm

Equity $50MM

Refinancing

Senior Lender and InvestorAmmonia, Urea

Jordan

A-Loan US$30mm, B-Loan US$60mm

Relocation of Phosphate RockExport Terminal

Jordan Phosphate Mines Co

Mandated Lead Arranger

Phosphate Rock/DAP

43

Select IFC Financed Fertilizer/Agrochem Projects (contd.)

Fertial

Equity InvestorAmmonia

Algeria

Equity Investment $24mm

Privatization of state owned fertilizer plant

Pakistan

Engro Chemical

Various Financing Rounds

Naturalgas based ammonia and urea plant

Mandated Lead ArrangerAmmonia/Urea

Indo Jordan

Mandated Lead ArrangerPhosphoric Acid

Jordan

A Loan US$30m, B Loan US$42.2m

Construction of a 224,000 tpa phosphoric acid plant and decicated sulfuric acid plant at a cost

of US$189 m

Jordan

A-Loan US$125mm, B-Loan US$105mm

Project Finance

Jordan India Fertilizer Company

Mandated Lead Arranger Petrochemicals

Abonos Colombianos S.A.

Senior Lender

Colombia

Project Loan-$30mm

Corporate loan to finance the Companys ongoing capital

expenditure program

Russia

Senior Corporate Loan-$15mm; Equity $20mm; Energy Efficiency Loans of $30mm

KuibyshevAzot JSC

Senior Lender and InvestorAmmonia, Urea

44

Select Investments along the Value Chain

Ahafo$75,000,000

Senior Term Loan

Mandated Lead Arranger2006

$10,000,000Syndicated Loan

Ghana

Mozal$145,000,000

Senior andSubordinated Loan

Lender1998 and 2002

Mozambique South Africa

Lonmin$100,000,000

Senior Term Loan$50,000,000

EquityEquity Investor & Lender

2006

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Simandou/RioTinto$35,000,000

Equity$150,000,000

EquityEquity Investor

2006, 2012

Guinea

$7,000,000Senior Loan

Lender2012

Kenya

Zambeef II

$25,000,000Loan

Lender2012

Zambia South Africa

Hans Merensky

$35,000,000Equity

Investor2012

Ghana

Lonmin

$12,500,000Loan

Lender2007

Salala Rubber

$10,000,000Loan

Lender2008

Liberia

Vegpro

M

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n

i

n

g

A

g

r

i

b

u

s

i

n

e

s

s

O

i

l

&

G

a

s

Dallol$10,000,000

Equity

Equity Investor2011

Ethiopia

Kosmos Energy$100,000,000

Senior Loan


Ghana

2009, 2012

Rialto Energy$20,000,000

Equity Investment

Investor (with AMC)

Cote dIvoire

January 2012

$10,000,000Equity Investment

Tunisia

January 2012Lender & Investor

Candax EnergyPetroceltic$100,000,000

Senior Loan


Egypt, Algeria

April 2013

VAALCO$65,000,000

Reserve-based Loan Facility

Lender

Gabon

January 2014

Company name: Dazhou Koyo, Approved: April 9, 2009

Description of company and purpose of project The project involved the construction and operation of a 400,000 tons per annum (tpa) and 450,000 tpa

ammonia/urea complex in Dazhou city, Sichuan, China. The company is located in Dazhou, 400 km away from Chengdu City, a poor region of China with rich natural gas reserves. This project uses gas as the primary feedstock.

Project sponsor and major shareholders of project company Koyo is a fully owned subsidiary of Koyo Ecological Agrotech Group Ltd. (the sponsor), which is a chemical fertilizer

company based in China with operations in Chengdu, Sichuan province. It is listed on the Hong Kong GEM

Total project cost and proposed IFC investment Project cost $150 million. IFCs investment $20 million equity and $20 million A loan on IFCs own account.

46

IFC Project - Dazhou Koyo, China

IFC Project OAO ToAz, Russia

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IFC Investment: US$ 30 million A Loan and US$ 45 million B Loan

Sponsors

ToAz is the largest Russian producer of ammonia and one of the largest global producers oftrade ammonia (supplying about 7.6% of the world market). It is also among the largest Russianproducers of nitrogenous fertilizers, producing mostly methanol, urea and urea formaldehyderesin.

Location of project

OAO ToAzs administrative headquarters, its seven ammonia plants and its two methanol plantsare all located in the city of Togliatti on the Volga river in the Samara Oblast in the southwestregion of the Russian Federation.

Project Description:

The project consists of the construction of a second methanol line, which will increase ToAzscapacity to 1 million t/y, as well as the upgrading of the existing methanol facility. This strategic move will enable the company to further diversify its operations into higher value-added products where margins are higher. This second line will enable the company to serve the needs of its domestic clients better and to increase it export earnings.

Commitment Date: May, 2005

Project Cost US$ 150 million

JIFCO, Jordan

48

IFC Investment: US$ 125 million A Loan

Sponsors

IFFCO, the largest producer of fertilizers in India. IFFCO owns and operates five fertilizer plantsin India with a combined annual capacity of 8.58 million tons of fertilizers, including over 4 milliontons of phosphatic fertilizers.JPMC is a Jordan based company listed on the Amman Stock Exchange. JPMC operates threemines, producing phosphate rock and downstream fertilizers, and a chemicals plant at Aqaba,Jordan producing phosphoric acid, DAP, sulfuric acid and aluminum fluoride.

Location of project

The chemical complex and associated infrastructure and utilities will be located adjacent to theexisting JPMC mining facility in Eshidiya, Maan, approximately 250 km south of Amman, and120 km north east of Aqaba Port, from which phosphoric acid will be exported.


The project envisages the construction and operation of a 475,500 metric tons P2O5 per annum phosphoric acid plant in Jordan. The bulk of the phosphoric acid will be exported to India to be used as feedstock for IFFCOs Kandla fertilizer plant in Gujarat state. The Project will include a greenfield phosphoric acid manufacturing complex in Eshidiya and a storage tank farm in Aqaba to facilitate export of phosphoric acid via Aqaba port.



Eleme Fertilizer- An Asian Investor in Nigeria

49

Sponsor

Location of project

Commitment Date:

IFC Investment:The total project cost : over US$1.2 billion. IFC investment is up to US$150 million in long-termproject loans and up to an additional US$200 million in parallel loans/syndication

The project sponsor is Indorama Corporation, an Indonesia based multinational

The project is located in Port Harcourt, the capital city of Rivers State, Nigeria


The project involves construction and operation of a 1.4 million metric tons per annumnitrogenous fertilizer plant within the clients existing petrochemicals complex in Nigeria. Oncompletion, the plant will produce granulated urea that will both be sold domestically andexported. An 84km pipeline from the gas suppliers facility to the plant will be developed inconjunction. The plant will consist of a 2,300 metric tons per day ammonia plant and a 4,000 tpdurea production plant. The investment is expected to help improve farm yields and agriculturalproductivity in Nigeria, and address the strong domestic demand for urea, estimated to grow at8% per annum over the next 20 years

December 2012

Corporate Project Orascom, Egypt & Netherlands

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Sponsors

Nameplate Capacity

Location of project and

description of site

Investment Date:

EFC manufactures granulated Urea with a total production capacity of 1.3mm tpa

IFC Investment: US$50 million equity & US$200 million debt

Orascom and its wholly owned subsidiary, the Egyptian Fertilizer Company (EFC), is one ofthe largest fertilizers and construction groups in the Middle East and Africa region and is presentin over 25 countries across the world.

OCI is headquartered in Cairo, Egypt. EFC is located in the Suez Industrial DevelopmentCompany, in Ain Sokhna, Suez Governorate on the Red Sea in Egypt. The Group includesfertilizers distribution channels in Western Europe, Dubai, Brazil and the United States.

Project Description: IFC provided a US$50 million equity investment and US$200 million debt financing to support the Groups long term investment needs and replacing existing shorter term debt financing, previously raised in to partially fund the acquisition costs related to the Groups fertilizers assets.

January 13, 2012

Example: Securitization Copeval (Chile)

Compaia Agropecuaria Copeval is Chilesleading agricultural input distributor,reaching more than 30,000 farmers throughits 27 branches across the country.

Copeval offers a one-stop shop to farmers,providing agrochemicals, fertilizers, seeds,agricultural machinery, irrigation equipment,intermediation and logistics services, fuel,animal feed, technical assistance andtraining.

The Company offers pre-harvest financing forthe acquisition of agricultural inputs(between 100-200 days of financing) as wellas up to 3-year financing for the acquisitionof agricultural machinery and irrigationequipment.

Company

IFC Investment:

Up to US$70 million (or its equivalent in

local currency)

Approved Investment Product: Securitization

Objective:

Expand its operations geographically andreach a total of around 30 stores by the endof 2013, throughout Chiles mainagricultural regions.

Expand its range of services and products,

Transaction

51

IFC Projects: KuibyshevAzot, Russia

52

Sponsors

Location of project

The project sponsor is Kuibyshevazot Open Joint Stock Company, existing IFC client. Located inTogliatti, Samara region, KuAz is the leading Russian manufacturer of caprolactam (the rawmaterial for synthetic fibers, engineering plastics, automotive and other downstream products) andone of the top Russian producers of nitrogenous fertilizers.

IFC Engagements:

Togliatti, Samara region, Russian Federation.

2002 Owned by management and employees, KuAz is identified by IFC as one of the few independent players in Russia's Chemicals industry

2003 IFC engages KuAz through IFC Russia Corporate Governance Project (RCGP); KuAzmanagement is receptive to the RCGP recommendations and proceeds with implementation

2005 First IFC $15mm senior loan approved2008 IFC approves $20mm equity investment in KuAz to support the Company's upcoming

IPO planned for 2008 (equity negotiated with a put and a reset)2009 In the midst of the financial crisis, which started in late 2008 and severely impacted

Russian economy, IFC extends $20mm Energy Efficiency loan to support the cost-cutting measures planned by KuAz and targeting improvements in its competitiveness

2012 IFC extends a second EE loan ($10mm) under the Cleaner Production Lending Facility

2013 IFC signs a mandate for $100mm A-Loan and $50mm B-Loan for the construction and operation of the new ammonia plant, as well as the cyclohexanone modernization (appraisal just completed in March 2013)

Project Finance PT Panca Amara Utama, Indonesia

53

IFC Investment: A Loan of US$130 million.

Sponsors

The Project Sponsor is PT Surya Esa Perkasa Tbk. (SEP), a company that is listed on theIndonesian stock exchange. Mr. Theodore Rachmat, Mr. Garibaldi Thohir and Mr. Vinod Laroya(through their shareholding in SEP) and SEP are the key Sponsors of this Project.

Location of projectThe Project is located Central Sulawesi Province. The plants site is approximately 40 km awayfrom the nearest airport which is at Luwuk the Capital of Banggai Regency.


PT Panca Amara Utama (PAU) is a private limited company that has set up a 2,000 metric tonnes per day greenfield ammonia production plant. The gas will be sourced from the Senoro-Toili gas fields in Central Sulawesi province of Indonesia. Key associated infrastructure for this project includes a pipeline to transport the gas to the plant and a jetty to supply the ammonia to buyers


Project Cost

The Project cost is US$750 million and has been financed by US$500 million of senior debt and US$250 million of equity. IFC has invested US$125 million in the form of debt and equity, to finance part of the Project. In addition to the above investment, IFC has mobilized US$400 million of senior debt from other banks.

54

Omnia CDG (South Africa)

Sponsor

Location of project

Commitment Date:

IFC Investment: $39 million

The Omnia Group, in business since 1953, is a diversified specialist chemical services companyproviding customized solutions in the chemicals, mining and agriculture markets. The Group hasalso diversified outside of South Africa, becoming a pan-African presence in Mauritius, Malawi,Mozambique, Swaziland, Zimbabwe, Zambia, Namibia, Botswana, Mali, Tanzania, Kenya as wellas Australia, France, Canada, New Zealand and Brazil.Omnia Group is listed on the JSE in the specialty chemicals sector

South Africa


The project provided a Carbon Delivery Guarantee for Certified Emissions Reduction credits(CERs) that were expected to be generated by Omnia Fertilizer Limited via the installation of anitrous oxide (N2O) destruction facility at its nitric acid plant in Sasolburg, South Africa.

June 2007

Company name: Paradeep Phosphates Limited (Paradeep") Approved: June 2011

Description of company and purpose of project Paradeep embarked on a capital expenditure program which, by 2015, will increase its production capacity of di-

ammonium phosphate (DAP) and nitrogen-phosphate-potash (NPK) by approximately 25 percent, and more than double its production capacity of intermediary raw materials

Paradeep will also set up a new captive power plant which will harness the waste heat from the new SAP and retrofit the waste heat recovery system in the existing SAP to enhance recovery efficiency. This will reduce the amount of power PPL purchases from the state grid by 83 percent

Project sponsor and major shareholders of project company Paradeep is one of the largest producers of complex phosphatic fertilizers such as di-ammonium phosphate (DAP)

and nitrogen-phosphate-potash (NPK or Complex Fertilizers) in India

Total project cost and proposed IFC investment Total project cost is over US$120 million. IFC investment is up to US$50 million in long-term project loans

Location of project and description of site The project site in in Orissa, on the eastern coast of India

55

Corporate Finance: Paradeep (India)

Company name: Fertilizantes Fosfatados S.A. ("Fosfertil") Approved: August 2001

Description of company and purpose of project Cost reductions and the expansion of Fosfertil's "high concentrate", i.e. high phosphate concentrate fertilizers such

as triple superphosphate (TSP) and monoammonium phosphate (MAP), were necessary to allow the Company to enhance its international competitiveness and to grow in line with demand growth

An investment program was developed to increase the output of "high concentrate" fertilizers by 22% by revamping and debottlenecking the Tapira phosphate mine and the MAP/TSP production plant in Uberaba. Furthermore, a new MAP granulator and a warehouse would be built

Project sponsor and major shareholders of project company At the time of project approval, The Fosfertil Group was Brazil's leading producer of phosphate and nitrogen

fertilizers with a market share of 34% and 17%, respectively

Total project cost and proposed IFC investment The total project cost : over US$85 million. IFC investment is up to US$25 million in long-term project loans, and

US$15 million in syndications

Location of project and description of site The phosphate mine is located in Tapira, Minas Gerais province in Brazil. The production plant is located in

Uberaba, in the western part of Minas Gerais

56

Fosfertil (Brazil)

IFC Project OPET Petrolculuk, Turkey

57


Sponsors

Opet Petrolclk A.S. is a retail distributor of petroleum products in Turkey, owned 50% by theKo Group of Turkey and 50% by Opets founding shareholders, the Ozturk family. The project isaimed at strengthening the companys position in the Turkish petroleum products distributionindustry and enhancing its competitiveness in advance of further liberalization.

Location of projectThe marine terminal and storage facilities are located north of the Marmara Sea in Thrace


The project is comprised of : (i) the construction of a greenfield marine terminal and tank storage facility which will increase the companys oil products storage capacity from 320,000 m3 to 766,000 m3; and, (ii) expansion of the companys existing retail distribution network, with new stations primarily located in the larger cities of Turkey.

Commitment Date: April, 2004


Petrotel-Lukoil (Romania)

58


SponsorsThe project sponsor and guarantor is OAO Lukoil, Russias largest integrated oil company.Lukoil's shares are publicly traded on the Russian stock exchanges

Location of projectThe Petrotel refinery is located in Ploesti, a city with 300,000 inhabitants in central Romania. Thecity is dominated by the Romanian oil industry, there are 4 refineries in the immediate area.Lukoil has 300 gas stations and 8 storage tank farms across the country.


The project involves the modernization and revamping program of S.C. Petrotel-Lukoil S.A., its Romanian refinery. The project is aimed at: (i) providing high quality petroleum products to Romanian consumers that comply with European Euro-3 and Euro-4 standards, (ii) improving refinery operations by increasing the output of higher value petroleum products and (iii) reduce emissions and energy consumption

Commitment Date: October, 2005


Corporate Finance: Mapei, Italy

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IFC Investment: Euro 50 million A Loan

Sponsors

Mapei is a private company owned largely by the Squinzi family. The Mapei producers anddevelops adhesives, sealants, waterproofing agents, concrete additives and other specialtychemicals for the construction industry

Location of projectTurkey, Mexico, Egypt, Panama, India, Russian Federation and other emerging countries


The proposed investment consists of an IFC senior loan to Mapei SpA to finance its capital investment program in emerging markets, including facilities in Turkey, Mexico, Egypt, Panama, India, Russian Federation and other emerging countries.

Commitment Date: May 2014

Project Cost Euro 63 million

Equity Investment: Soda Sanayii, Turkey

60

Sponsors

Location of project

Commitment Date:

IFC Investment:US$ 25m

The project is sponsored by Turkiye Sise ve Cam Fabrikalari A.S. (or Sisecam) and itssubsidiaries, Anadolu Cam in glass packaging and Trakya Cam in float glass, all of which arelisted on the Istanbul Stock Exchange (BIST). Sisecam is a leading Turkish producer of flatglass, tableware, glass containers, glass fibers and associated products worldwide. 89.7% ofSodas shares are directly owned by Sisecam group companies and the remaining portion of theshares are listed on BIST

Turkey


Sisecam has invited IFC to become a shareholder in Soda, as part of the Groups program of eliminating cross-ownership in the Group. The project entails an IFC equity investment in Soda, a Turkey synthetic soda and chromium producer. IFC will buy shares from two subsidiaries of the Sisecam group, which in turn are expected to use the proceeds in energy efficiency investments.

Project CostIFCs proposed secondary purchase of US$25 million worth of Soda shares corresponds to less than a 5% shareholding in the company.

November 2014

Finding Solutions for farmers: Bayer, Ukraine

61

Sponsor

Location of project

Commitment Date:

IFC Investment:$87.5 million risk sharing facility

Bayer AG is Germany-based pharmaceuticals, polymers and agrochemicals conglomerate withsales of about 40 billion and EBITDA of about 8.3 billion in 2012. The groups structureconsists of three divisions: Bayer Healthcare, Bayer CropScience and Bayer MateriaScience.Bayer CropScience manufactures herbicides, insecticides, fungicides, seed treatment and seeds.

Bayer Ltd. covers the entire territory of Ukraine via the chain of local distributors.


Risk sharing facilities with Raiffeisen Bank Aval and Credit Agricole Bank of up to US$87.5 million on the portfolio of receivables generated by Bayer Ltd. Ukraine on the sales of crop-protection products to private sector farmers in Ukraine. The RSF covers a portfolio of seasonal receivables (with maturities less than 1 year) with a total portfolio amount of up to US$175 million equivalent in local currency.

April, 2011; March, 2012

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