Beirut - May 13th, 2009

Financing Forum

PROPARCO (AFD GROUP)

Elodie PARENT

Sanabel 6th Annual Conference

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

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 420Balance sheet : € 1,6 billionNet income : €M 20,8

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

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

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 ?Could the financial performances justify the interest rate ?

=> Main shareholders and shareholding pattern and managers

AL AMANA – Quasi-equity investment

Al Amana is an NGO => not possible to invest in equityAl 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

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:

Elodie Parent T : +33 (0) 1 53 44 37 04parente@afd.fr

Bérengère Basset T : +33 (0) 1 53 44 37 36

bassetb@afd.fr

Amélie July T : +33 (0) 1 53 44 35 60julya@afd.fr

Key contacts

Thank you for your attention