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IFC in Agribusiness Funds

IFC in Agribusiness Funds . October 14, 2010 . IFC has invested over $100 billion in Emerging Markets since 1956. Largest multilateral source of loan/equity financing for the emerging markets private sector Founded in 1956 with 182 member countries AAA rated by S&P and Moody’s

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IFC in Agribusiness Funds

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  1. IFC in Agribusiness Funds October 14, 2010

  2. IFC has invested over $100 billion in Emerging Markets since 1956 Largest multilateral source of loan/equity financing for the emerging markets private sector Founded in 1956 with 182 member countries AAA rated by S&P and Moody’s Equity, quasi-equity, loans, risk management and local currency products 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 Holds equity in over 800 companies worldwide IFC FY10 Highlights Portfolio * $48.8 billion Committed * $18.0 billion Mobilized $ 5.3 billion # of companies 1776 # of countries (portfolio) 129 # of countries (committed) 104 * Includes for IFC’s own account and mobilization Composition of FY10 Transaction Volume

  3. IFC invests across the Agribusiness Value Chain - US$2.0 billion in FY 2010 IFC’s Goal: Deliver development impact along the global agri-supply chain, through investments and advisory services with the private sector, to create opportunities and improve peoples’ lives Fertilizers and other Chemicals Project/CorporateFinance CIT – Access to Markets Land Inputs Farm Production Collection Processing Marketing Distribution Retail Market Infrastructure Infrastructure/Logistics Financial Institutions Pre-HarvestFinance TradeFinance Risk Sharing Facilities

  4. The active portfolio of agri-related investments was $3.9 billion at FYE09 (excludes Trade Finance) IFC has significantly increased its agri-financing in recent years..

  5. Short Term Response Medium Term Response Long Term Response … and developed a strategic response to food crisis • Provide liquidity throughout the value chain • Trade finance • Working capital • Wholesaling finance • Supply side response through global agricommodity players • Emphasize productive land investments and productivity gains • Improve supply chain infrastructure • Trade finance • Technical programs on the ground: access to finance, access to markets-linkages, productivity support • Improve logistics, product-to-market efficiencies • Reform agenda: regulatory / land / trade policy • Drive integration of small farmers into global agrisupply chain … which also entails to increase productivity in agriculture through investments in funds!

  6. IFC`s recent experience in Productive Land Projects Land Development - South America - Regional Land Fund - South America - USD 50 million USD 50 million • Regional Fund for Land Consolidation & Farm Development • Business Model: • Consolidates large tracts of land (primarily grazing land) and develops for farming purposes. • Provides technical expertise, including use of best-in-class techniques and inputs • Large-Scale Farm Operator • Business Model: • Farms large tracts of purchased or leased land, creating economies of productive scale. • Provides technical expertise, including use of best-in-class techniques and inputs • Intent on rapidly increasing size of managed areas Global Land Agri Fund SE Europe EUR 15 million USD 75 million • Land Real Estate Investment Trust (REIT) • Business Model: • Acquire small agri-land plots within the same municipality • Rent out to modern farming company • Realize value through higher land productivity translating into higher land prices for REIT • IFC to invest equity to scale up operations • Agri-Land Focused Fund Manager • Business Model: • Identify and invest in regional agricultural farming and production companies. • Build companies into scalable platforms by providing growth capital, increasing productivity and yields • Geographic and product diversification in strategic areas.

  7. IFC`s Rational and Role in Investing in Funds Investment Rational IFC Value Added • Why is IFC considering investments in funds? • Reach smaller agribusiness companies which IFC is not able to target directly; • Support funds who aim to increase land productivity, improve agricultural practices and have a demonstration effect in agriculture sector; and • Support emerging fund managers to secure the targeted fund size at closing. • What value does IFC add to the funds in agriculture? • Provide stamp of approval by assisting the fund manager in structuring the Fund according to international best practices; • Disseminating of Corporate Governance and E&S best practices; and • Provide industry and regional expertise to assist the funds. IFC does not invest in funds with (i) an objective of land speculation, (ii) a narrow focus (biofuel or single crop), and (iii) no relevant experience or management team.

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