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September, 2007 Skopje, Macedonia

International Finance Corporation (IFC) Global Information & Communication Technologies Practice. September, 2007 Skopje, Macedonia. IFC’s fundamental role is to promote economic development by encouraging private investment, both foreign and domestic, in developing member countries

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September, 2007 Skopje, Macedonia

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  1. International Finance Corporation (IFC) Global Information & Communication Technologies Practice September, 2007 Skopje, Macedonia

  2. IFC’s fundamental role is to promote economic development by encouraging private investment, both foreign and domestic, in developing member countries IFC participates in private ventures that benefit the host country economy, promote high environmental standards, and provide strong demonstration effect International Finance Corporation World Bank Group Promote sustainable private sector investment in emerging markets International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Development Association (IDA) International Bank for Reconstruction and Development (IBRD)

  3. AAA rated member of the World Bank Group which is owned by 179 countries Major source of IFC’s borrowings is the international markets, $1.8 bn in FY06 FY06 commitments: $6.7 bn in 284 projects Authorized capital: $2.5 bn FY06 Net Worth: $11.1 bn FY06 Net income: $1.3 bn Between 1956 and 2006, approximately $56 bn of own funds invested in 3,531 companies in 140 developing countries - Additional $25 bn mobilized from other investors International Finance Corporation $21.6 bn committed portfolio at end of FY 2006 Notes: Data as of July 2005

  4. Southern Europe & Central Asia Region IFC’s Southern Europe & Central Asia (SECA) Region • IFC’s annual investments in the SECA region have reached a billion USD in FY 2007: • Investments in SECA in USD million: • Turkey is IFC’s 5th largest country exposure with a $1.27 bn portfolio as of August 31, 2007 • The Hub Office for the SECA region is located in Istanbul, Turkey, with representative offices in other countries • Albania • Azerbaijan • Bosnia and Herzegovina • Bulgaria • Croatia • Kazakhstan • Kyrgyz Republic • Macedonia • Moldova • Montenegro • Romania • Serbia • Tajikistan • Turkey • Turkmenistan • Uzbekistan

  5. IFC in Information & Communication Technologies IFC is the largest multilateral financier of Information and Communication Technologies projects in emerging markets. • First telecoms investment in 1969. • Nearly US$5.1 billion in financing commitments for 125 investments in 45 countries by the end of FY 2006 • Current outstanding portfolio in ICT totals US$1.4 billion. • Close relationships with many key players in the industry (regulators, operators and equipment suppliers). • One of the best-performing sectors within the World Bank Group, both in terms of financial returns and development impact

  6. Distribution of IFC’s Actual ICT Portfolio By Regions By Segments

  7. IFC’s Products and Services • Long Term Financing • Corporate / project financing • Equity / Quasi-equity Industry knowledge & contacts • Capital Mobilization • Commercial bank lending - exempt from withholding tax & provisioning requirements Sensitivity to Government priorities IFC’s Products Commercial & technical skills in emerging markets • Advisory Services • Country, industry, financial and technical advise

  8. GICT: A Value Added Partner • Global perspective on ICT • Advice based on intimate understanding of global technology trends & best practices • Global presence & network permits borderless engagement • Leading emerging market investor in the telecom and IT industry • Long-term financing partner • Invest across company lifecycle – early, mid and late stage • Array of financial products – equity, quasi-equity, debt, guarantees, cross border financing • Funds mobilization through international network of financial institutions & capital markets • Extensive World Bank & IFC network • Established presence in over 75 emerging market countries • Long-standing relationships with governments & companies across member countries • World Bank & IFC credibility & stature • Track record in emerging & frontier markets reassures foreign investors & host countries • Recognized emerging market leader in corporate governance & sustainable development

  9. Investment Philosophy • Telecom / Media: • Private sector management & majority ownership • Some sponsor requirements (transparency, reputation) • IT: • “Stage independent investor” – early, mid & late stage • Various instruments - Common & Preferred Equity, Quasi equity, e.g. Convertible Loans, Loans with Warrants, Mezzanine financing • Minority equity positions: 5% to 20% • Board participation (observer role only) • Investment focus: IT Services, IT Enabled Services, Software Development, e-Commerce, e-Government • Provides introductions to strategic partners • Follow-on financings available

  10. IFC’s Investment Criteria • Similar to commercial banking requirements, plus: • Global Emerging Markets focus • Private sector management and majority ownership • Selectivity of sponsors, especially regarding transparency and reputation • Investment limited to 25% of total project cost (50% for expansions), but no more than 25% of total capitalization of the company. • Demonstrable development impact: • Positive economic return. • Social and environmental impacts mitigated. • Typical deal size: • Telecom / Media: US$15-100 million • Information Technology: US$ 2-20 + million

  11. ICT Projects of IFC in Southern & Eastern Europe • Turkey - Meteksan (IT): US$8.5 million term loan to Meteksan to refinance short-term debt and support expansion plans and working capital requirements • Russia - IBS (IT): US$8 million convertible loan to IBS to support financial restructuring and expansion plans • Romania – Orange (Mobile): US$215 million syndicated term loan to Orange Romania • Moldova – Voxtel (Mobile): US$35 million syndicated term loan and Equity to France Telecom’s subsidiary in Moldova • Albania – Vodafone (Mobile): US$41.5 million term loan to Vodafone Albania • Macedonia - Maktel (Fixed and Mobile): US$30 million syndicated term loan and equity investment to Matav’s subsidiary • Hungary – Matav (Fixed and mobile): US$100 million pre- and post privatization term loan and equity investment • Russia – Sonic Duo (Mobile): US$30 million syndicated term loan and mezzanine investment

  12. IFC’s Investment Process Internal to IFC As Seen By Client Initial Discussions Initial Review & Authorization to Appraise Management Approval Mandate Letter Appraisal Financing Negotiations Info. Memo & Syndication Legal Documentation Disbursement Board Approval Supervision 20

  13. Let’s Discuss Further – We are there to Work with You Marko Curavić Investment OfficerSouthern Europe & Central Asia Region Istanbul Office Tel: +90 212 385 3000 Fax: +90 212 385 3001 Email:MCuravic@ifc.orgWeb: http://www.ifc.org

  14. ANNEX: Examples of IFC’s Transactions

  15. GICT Flagship Transactions Russia: IBS (Information Business Systems) • In 2002, IFC provided US$8 million convertible loan to IBS to support financial restructuring and expansion plans • IBS is largest IT group in Russia • Operates largest offshore software development company in Russia under brand Luxoft • Largest IT distributor & systems integrator in Russia • Developing own computer brand and direct distribution model in Russia • IFC’s investment : • Increased availability of IT products & services in market • Offered innovative convertible debt structure with longer tenor than available in market • Advised IBS in building executive team & benchmarking performance v. global IT service leaders in India and elsewhere • IBS has grown more than 4x since investment • IBS has become the leading employer of high end IT professionals in Russia • Sent positive message to investors about attractive opportunities Russia’s IT sector • IBS has become a vocal leader advocating regulatory reform in Russia

  16. GICT Flagship Transactions India: DQ Entertainment • In 2003, IFC invested $3 million in DQ Entertainment, leading animation services company • Provides outsourced & proprietary 2D/3D animation & multimedia services • Clients include Disney, Warner Brothers, Universal, Il Grupo Alcuni • IFC’s investment & presence : • Helped take DQ Entertainment’s operations to next level through addition of latest CGI/3D animation facilities • Early mover and catalyst for India’s animation industry, which requires highly skilled & creative professionals • Part of IFC’s strategy to help innovative Indian companies expand into global markets, creating export earnings & employment • Assisted DQ in raising next round of financing within 12 months at substantial premium

  17. GICT Flagship Transactions Russia: TV3 • In April 2004, IFC invested $7.0 million in parent company of TV3 Russia • Existing shareholders provided $5.0 million • TV3 will expand distribution capabilities & broadcast infrastructure • Plans to enhance program offering with wider range of family-oriented entertainment content • TV3 Russia - rapidly growing independent terrestrial television broadcaster reaching nearly 45 million people • IFC’s involvement contributes to: • Development of independent private media in Russia • Stimulates business growth in advertising & broadcasting industries • Supports development of Russia’s telecom sector

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