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Beirut - May 13th, 2009

Sanabel 6 th Annual Conference. Beirut - May 13th, 2009. Financing Forum. PROPARCO (AFD GROUP). Elodie PARENT. General overview of PROPARCO. Created in 1977 and dedicated to the financing of private initiatives in emerging and developing countries:

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Beirut - May 13th, 2009

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  1. Sanabel 6th Annual Conference Beirut - May 13th, 2009 Financing Forum PROPARCO (AFD GROUP) Elodie PARENT

  2. General overview of PROPARCO • Created in 1977 and dedicated to the financing of private initiatives in emerging and developing countries: • Shareholding split amongst AFD (59%) and selected private business partners ; • Role of promotion of investments and market structuration through grant of loans, guarantees and equity investments; • Focus on selected economic development issues : • Infrastructure, Banking and financial services, Participating in investment funds, Promotion of natural ressources & Microfinance

  3. Key figures 2008 • Key figures 2008 a year of growth Loans :Commitments : €M 683,5Outstanding loans : €M 1029,8 Equity :Transaction approvals: €M 99,1(17 transactions).Gross value of equity portfolio: €M 215,7 Guarantees :Transaction approvals: €M 6,8Committed guarantees : €M 55,8 Capital: €M 420 Balance sheet : € 1,6 billion Net income : €M 20,8

  4. Proparco’s Microfinance strategy • Objective: support MFI’s operating in areas where market risk-profitability ratios do not allow them to finance their growth using private ressources • Financial tools: • - Equity and Quasi-Equity: Less than 20% of the capital of the institution, a minimum ticket of 1 MEUR, exit policy at 7-8 years • - Loans: 3 to 15-year maturity, minimum 5 MUSD, denominated in EUR, USD or local currencies, at market conditions, senior and/or subordinated loan • Guarantees: all types and tenors, commercial loans or bond issues, local or hard currencies • Operating criteria: • - Greenfield or brownfield projects, • - Any legal structures (Bank of microfinance, NGO, company…), • - Financial structure => next slide

  5. Key criterias • Size : minimum equity of 5 MUSD and • total assets of 50 MUSD • Profitability: positive net profit for 3 years minimum, • minimum ROE of 10% and ROA of 1.5%, • Loan portfolio/total assets > 70% • Quality of portfolio (Portfolio at Risk < 5 % in any case). • Financial rating • Strategy and positioning on the market

  6. Key criterias – Cont’d • Governance • Anti-Money Laundering and against the Financing of Terrorism procedures (AML/FT) • Environmental Responsibility (ESR) • Transparency • Social performances as guidelines for both (i) internal management of the MFI and (ii) operational activities • Rate policy as linked to the financial performances : • Could the financial performances justify the interest rate ? • => Main shareholders and shareholding pattern and managers

  7. AL AMANA – Quasi-equity investment • Al Amana is an NGO => not possible to invest in equity • “Equity” enhancement of 9 MEUR to match the ratio : • “Equity like”/Total assets = 15 % (financial covenant) • Tenor : 8 years & grace period: 5 years • Context : subordinated loan to MFI are not regulated => what ensure recognition of subordination by other investors ? • Structuration of the subordination aligned on local banking regulation (no prepayment can be asked by Proparco in any case,…) • Issue of local currency => guarantee to a local bank which provides the local subordinated funding • => High level of commitment of Proparco => hence need for the key criterias to be fulfilled

  8. PROPARCO 151, rue Saint Honoré; 75 001 Paris Tel : +33 (0)1 53 44 31 08 Fax : +33 (0)1 53 44 31 07 PROPARCO key contacts: Amélie July T : +33 (0) 1 53 44 35 60 julya@afd.fr Elodie Parent T : +33 (0) 1 53 44 37 04 parente@afd.fr T : +33 (0) 1 53 44 37 36 Bérengère Basset bassetb@afd.fr Key contacts

  9. Thank you for your attention

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