Example

1

PRIVATE SECTOR WITH PURPOSEIDB seeks to create opportunities for current and future generations in Latin America and the Caribbean through sustainable private sector investments.

If it’s not purpose, it’s not IDB.

2

WE CAN SUPPORT YOU

IDB works with large- and medium-sized businesses, including private utilities and infrastructure operators, banks and financial market institutions, state-owned entities without a sovereign guarantee and corporations.

Our financial and technical solutions help businesses meet their financial needs while improving the living standards of people across the region.

WE SUPPORT YOUIDB works with large– and medium–sized businesses, including private utilities and infrastructure operators, banks and financial institutions and state-owned enterprises.

Through the Structured and Corporate Finance Department (SCF), IDB partners with private sector entities to achieve breakthrough financial results with high development impact.

3

• Loans • Syndicated loans (B loans and parallel loans)• Guarantees• Climate change concessional finance

Financial Services

Technical Cooperation

• Resources for project preparation and execution

• Clean energy audits• Shared value appraisals• Knowledge creation and sharing tools

OUR TOOLS

4

48 member countries, including 26 borrowing members

26 country offices throughout Latin America and the Caribbean, one in Madrid and one in Tokyo

AAA/Aaa ratings by Standard & Poor’s /Moody’s

Largest source of development financing for Latin America and the Caribbean since 1959

OUR REACH

5

WE KNOW YOUR BUSINESSIDB offers unique industry experience. Our investment officers know how to create tailored financial and technical solutions that work. Our experience extends across a range of economic sectors.

6

Social Infrastructure

Industries and Services

SyndicationsFinancialMarkets

Infrastructure

PAGE 8

PAGE 12

PAGE 29

PAGE 18

PAGE 40

7

Facilitating the development of advanced infrastructure projects

InfrastructureInfrastructure

8

We work in collaboration with governments and concessionaires to ensure projects are viable financially, socially and environmentally from the outset. Our priority areas include:

• Energy • Transportation• Water and sanitation• Public-private partnerships

IDB helps take on large infrastructure projects that are complex and knowledge intensive.

9

Investing in Hydropower:Peru and Costa Rica

C A S E S T U D Y

IDB IS PLAYING a leading role in catalyzing private sector financing to complete much-needed renewable energy projects in wind, solar and hydropower.

While wind has taken off in recent years, IDB is witnessing a surge in hydro projects that not only strengthen the region’s water infrastructure and low carbon growth, but also incorporate environmental and social best practices that go beyond business as usual.

Chaglla (Peru):

With project costs totaling approximately $1.2 billion, of which $150 million was provided by the IDB, the Chaglla project

is an example of IDB’s desire to invest in projects that increase the competitiveness of a company and its financial returns, and at the same time create new opportunities for current and future generations:

• Chaglla generates more than 400 MW with a reservoir of just five square kilometers and is designed to keep the environmental impact to a minimum by camouflaging 16 kilometers worth of tunnels in nature.

• 100 percent of the unskilled labor force comes from the surrounding community. In addition, Empresa de Generación Huallaga, a subsidiary of Odebrecht, invested in the educational

10

C A S E S T U D Y program CREER to provide additional qualified labor training to more than 1,300 people from Chaglla.

Reventazón (Costa Rica):

Central America’s biggest renewable energy project to date, the Reventazón project received an IDB loan approval for $200 million to build a 305 MW hydropower plant along the Reventazón River in Costa Rica. This project is trailblazing in many ways:

• The first hydropower plant to establish an offset for river habitat in Central America, Reventazon will contribute to the Jaguar Corridor Initiative and long-term preservation of the largest living cat in the Americas. This environmental offset model could be replicated in other projects throughout the region.

• Once completed, the project will represent roughly 10 percent of Costa Rica’s total installed electricity generation capacity and will contribute to the country’s goal of reducing its carbon emissions.

11

Financial Markets

Promoting strong and sustainable financial systems

Financial MarketsFinancial Markets

12

The Financial Markets Division of the IDB’s Structured and Corporate Finance Department contributes to the creation of sustainable financial systems in LAC by combining knowledge and experience with tradition and innovation.

The IDB’s beyondBanking: banking on global sustainability program is the platform to achieve this objective.

1) Green Lines: Supports financial intermediaries to help reduce their direct and indirect carbon footprints.

2) Access2Finance Lines: Supports financial intermediaries to reach specific stakeholders through customized credit lines:

• access2Capital Markets: Offers credit enhancement mechanisms and allows financial intermediaries to diversify funding sources.

13

• access2People: Fosters more inclusive financing for households traditionally excluded by mainstream markets.

• access2Services: Offers clients financing to support key services such as health, education and infrastructure.

• access2SMEs: Provides clients financing to support SMEs and help reduce the gap in access to finance.

• access2Trade: Supports banks and funds through a trusted trade finance network that promotes intra-regional and global integration.

www.iadb.org/beyondbanking

14

CAMIF: Closing the financial gap in medium-sized infrastructure projects

C A S E S T U D Y

Overview

To strengthen development in Central American countries, it is imperative to invest in infrastructure. However, only 2 percent of GDP is currently invested when at least double is needed. This is why private sector participation is essential to complement the efforts of public institutions. Mid-sized companies in Central America face two barriers: difficulty accessing credit and the perception among investors that small countries are higher risk. IDB, alongside other partners, supports the Central American Mezzanine Infrastructure Fund (CAMIF), which seeks to close the financing gap for mid-sized companies.

Highlights

IDB approved a loan of $60 million to help meet the need for medium- and long-term financing for the infrastructure sector in Central America and to a lesser extent in Colombia and Mexico. With additional resources from the Central American Bank for Economic Integration (BCIE) and other public institutions and private investors, the fund reached US$150 million.

In total, eight projects were financed in five countries (Colombia, Dominican Republic, Guatemala, Honduras and Mexico). The projects focused on renewable energy, transportation, telecommunications and natural resources.

15

Development Impact

The fund supports projects focused on mid-sized and family-owned businesses and, by doing so, has a broad impact on society. The fund-supported projects are improving social and environmental practices in the region—going beyond minimum legal requirements—and generating jobs and creating shared value between communities and businesses. In numbers, this translates into:

Employment

• Maintaining 1,502 existing jobs

• Hiring 1,267 short term contractual workers

• Creating 800 new full time jobs, increasing by half the workforce of the fund-financed companies

Environment

• Generating 90 MW of renewable energy (hydro and biomass)

• Reducing CO2 emissions in Colombia and Guatemala by 1.72 million tons

Noteworthy CAMIF projects include:

• Río Las Vacas Hydroelectric Plant (Guatemala): A 45 MW hydroelectric plant near Guatemala City. Since CAMIF invested in the company, 70,000 tons of CO2 have been avoided, and a waste removal and recycling system has been established.

• Propalma (Mexico): A family-owned company that produces palm oil in Chiapas, one of the poorest states in Mexico. Palm-oil imports have declined and local consumption has increased thanks to the construction of a new

C A S E S T U D Y

16

refinery, the growth of working capital and the expansion of the plantation territory. This project stands out for its support of small and micro palm producer programs, which include agricultural inputs and sustainability training. Small and micro producers provide approximately 90 percent of Propalma’s raw materials.

• Honduran Green Power Corporation (Honduras): A company created to build a 35 MW biomass electricity plant. The project has two objectives: to reduce the amount of fossil fuel used for energy generation, and to create an independent energy supply network in the industrial sector of San Pedro Sula.

Given the success of this operation, the IDB decided to participate in a second CAMIF fund, which will expand its scope of action to Caribbean countries and aims to reach US$250 million.

C A S E S T U D Y

17


Building private investment in productive industries and services sectors


18

We help clients identify ways to scale up business operations that maximize sustainable results. Our priority areas include:

• Agribusiness

• Clean fuel alternatives

• Industrial energy efficiency

• Manufacturing and logistics

• Sustainable mining, gas and forestry

• Tourism

IDB supports private investment strategies for a range of companies in productive industries and services sectors.

19

IDB IS SUPPORTING Montes del Plata Group through a $200 million loan to build and operate a eucalyptus pulp plant and a biomass electricity plant. The largest private sector investment in Uruguay’s history (approx. $2 billion), it follows strict environmental and social standards for renewable forestry. Given its size, Montes del Plata has a strategic importance for the positioning of Uruguay’s forest products sector and is expected to:

• Create 5,800 and 5,350 jobs during construction and operations, respectively

• Produce 160 MW of renewable energy (approx. 70 MW exceed internal needs and will be supplied to the national grid and other industrial entities)

• Contribute approximately $750 million annually to GDP and generate approximately $700 million in exports each year (approximately 11% percent of Uruguay’s total exports in 2009)

Montes del Plata: Promoting Renewable Forestry Practices

C A S E S T U D Y

20

Slideshow: Montes del Plata

Located 190 km west of Montevideo, Uruguay in Punta Pereira, Montes del Plata’s industrial complex is the future site of a eucalyptus plantation-based pulp production plant.

21


The largest private sector investment in Uruguay’s history, Montes del Plata was approved for a $200 million IDB A loan and a $254 million IDB B Loan in 2011 to help finance the construction and operation of the eucalyptus pulp mill.

22


The Montes del Plata project also includes a 160MW biomass electricity generation plant, a fluvial port terminal and barge terminals with a wood yard and chipping plant.

23


The mill’s power unit – the largest biomass generator in Uruguay – will cover the plant’s electricity needs and supply additional energy to the Uruguayan power grid.

24


Montes del Plata expects to create about 5,800 direct and indirect jobs during the construction phase and 5,350 direct and indirect jobs during operations.

25


The project follows IDB’s high environmental standards related to the industry and industrial associated process.

26


Weighing more than 124 tons and reaching 30 meters in height, this recovery boiler is the heaviest object transported in Uruguay – ever. It converts heat into steam energy.

27


Once operational, Montes del Plata is expected to contribute about $747 million per year to the country’s GDP, with exports reaching $697 million (approximately 11% of all Uruguay exports in 2009).

28

Partnering with the private sector to provide health and education services

Social Infrastructure

29

IDB facilitates private sector provision of affordable health and education services to middle- and low-income families and underserved populations. Our priority areas include:

• Education (e.g., higher education, specialized schools and school-to-work programs)

• Healthcare (e.g., hospitals, health clinics, pharmaceuticals)

IDB’s vast experience in health and education make it an optimal partner for private sector companies, entrepreneurs and financial intermediaries seeking to invest in these social sectors.

30

C A S E S T U D Y

THE EXPLOSIVE demand for higher education in Latin America and the Caribbean is both an opportunity and a challenge for ensuring quality and equity of access. As a leading player supporting private sector education in the region, IDB works with its borrowers to enhance quality and equity of access in their businesses. In Ecuador, IDB is supporting the Universidad Politécnica Salesiana (UPS), a socially inclusive private university with 18,000 students, the majority of them middle- and lower-income. UPS also has a specialized program for indigenous students.

• Through a $15 million IDB loan, UPS will expand its campus and provide

affordable high-quality education to an additional 5,000 middle-to-low income students in Quito, Guayaquil and Cuenca

• IDB’s support will also help UPS improve its infrastructure and acquire state-of-the-art equipment, benefitting those lower-income students who cannot gain entry to Ecuador’s free public universities

• Proceeds from the IDB loan will also be used to set up a $2 million student loan fund, which is being designed to be more favorable than current student loan offerings available in the market

Universidad Politécnica Salesiana: Access to Higher Education for Lower-Income Students

C A S E S T U D Y

31

Slideshow: Universidad Politécnica Salesiana

A socially inclusive Catholic university, UPS offers higher education services to approximately 18,000 students and has a dedicated program for indigenous communities.

32


Volunteer students use audio-based technology to teach blind students to use computers. UPS offers student loans that can be repaid through voluntary community work.

33


The university trains a select group of students to teach young children in remote communities.

34


When students cannot access the university, UPS goes to the students. These indigenous children learn from newly trained UPS teachers.

35


Many Ecuadoran women directly or indirectly benefit from the education that UPS provides.

36


UPS sponsors a unique dairy program that supports one of the key income-generating sectors in rural Ecuador. In this picture a student tests a cow’s health and ensures its milk is safe for consumption.

37


Once the milk has been tested and found safe, dairy farmers receive the necessary documentation to qualify for sales to corporate distributors. This significantly increases the farmers’ revenue, as their products are then marketed nationally.

38


This mother and daughter’s income and quality of life has improved thanks to the UPS dairy program.

39

Magnifying the development impact of the private sector

Syndications

40

Through our syndications program, IDB increases the development impact of the private sector.We mobilize needed financing for businesses across Latin America and the Caribbean. Acting as a catalyst, we leverage our own investments (A loans) and mobilize other sources for co-financing through our B loans and parallel loans.

41

KEY BENEFITS OFIDB’S B LOAN PROGRAM

IDB acts as the Lender of Record and administers the entire loan

IDB fully shares project risks with participants

Participants benefit from IDB’s privileges and immunities, including preferred access to foreign exchange and exclusion from general country debt reschedulings

Participants are exempt from withholding taxes

Tenors can go two to three years beyond the commercial market

One Loan Agreement

Preferred Creditor Status

Distributes Risks

Tax Exemptions

Longer Tenors

42

POWERFUL PARTNERSHIPSPowerful partnerships are the core of our success. We approach every challenge as unique and actively engage the greatest minds and institutions to ensure that we live up to our mission.

43

IDB partners with clients to measure, monitor and evaluate the project’s contribution to the economic and social development of a country or the region. From design to completion, our dedicated team works hand in hand with clients to achieve strong development results.

PARTNERING FOR RESULTS

44

Designing for Results

Monitoring Progress

Identifying Impacts

At the outset, IDB partners with clients during the proposal phase to identify the development challenges to be addressed, and the expected social and economic development results.

At implementation, IDB works with clients on an annual basis to track the progress of the development results outlined in our Development Effectiveness Matrix.

Throughout the life of a project, IDB identifies opportunities to improve the living standards of people, reduce the effects of climate change and support the funding needs of SMEs.

45

The private sector plays a pivotal role in the solution to the climate crisis. IDB understands the challenges faced by businesses and has scaled up lending. By 2015, we aim to dedicate an unprecedented 25 percent of IDB total annual lending to climate investments.

PARTNERING FOR CLIMATE SOLUTIONS

46

To boost private sector investments, IDB has created two financially innovative funds:

• The Canadian Climate Fund for the Private Sector in the Americas (concessional loans)

• The Nordic Development Fund (grants)

$250 Million Canadian Climate Fund for Private Sector in the Americas • The first of its kind for Latin

America and the Caribbean, this fund aims to catalyze private sector investments in climate change mitigation and adaption.

• How does it work? Through concessional loans, the fund offers businesses much-

needed mezzanine capital and longer payback options to incentivize investments in solar, reforestation and geothermal energy, among other sector.

Increasing Energy Efficiency in Central America • The Nordic Development Fund

(NDF) provides grants to help Central American companies increase their energy efficiency and adopt clean technologies.

• How does it work? NDF finances detailed energy audits to identify opportunities for businesses to reduce costs and greenhouse gas emissions.

47

PARTNERING FOR SHARED VALUEMore and more, clients come to IDB looking to increase both their competitiveness, and their social and climate impact, thus improving returns for their business and community and deriving an investment with shared-value.

IDB offers shared value appraisals of a company’s growth outlook within the context of surrounding societal challenges by:

• Surfacing shared-value investment opportunities

• Providing in-depth cost-benefit analysis for the identified investment

• Offering in-house specialists trained to prepare investment plans

48

C A S E S T U D YC A S E S T U D Y Chile: SubsoleCreating Shared Value in Action

SUBSOLE, THE LARGEST Chilean-owned fruit exporter, has found success in the combination of an inclusive business model, quality produce and sustainable farming techniques. A long-standing client of IDB, Subsole generates 22,740 jobs and through its small- and medium-sized producers reaches as many as 56,850 beneficiaries. In addition to groundbreaking labor initiatives, such as the provision of meals, medical care, transportation and accommodation for its workers, Subsole has embarked on a path toward energy efficiency.

Shared-Value Investment Solution

• Invest in technology to increase farmers’ yields

• Design and implement gender-focused training

• Invest in solar power for improved energy efficiency

Benefits to Subsole

• Higher revenues because of improved supply and increased production

• Increased worker productivity as a result of job training

• Reduced energy costs through use of solar alternatives

Benefits to Community

• More profitable local farms

• Greater retention and advancement of working women

• Lower carbon footprint

49

Slideshow: Subsole

Twenty years ago, a group of Chilean agronomists and experienced farming families had a vision of creating a new type of fruit exporting company.

50

Slideshow: Subsole

This company would have an inclusive business model where growers would share in the benefits of the company’s development.

51

Slideshow: Subsole

Today, Subsole is the largest Chilean-owned fruit exporter. It is comprised of different companies at key points in the fruit-supply chain and has a significant impact along the entire chain.

52

Slideshow: Subsole

It spends a substantial portion of its operating costs on transferring knowledge and technology to farmers, helping them meet the latest international environmental and labor standards.

53

Slideshow: Subsole

The company understands the powerful combination of quality and sustainability. The potential impact of IDB support to Subsole is substantial.

54

Slideshow: Subsole

IDB’s $32 million loan and technical assistance will allow Subsole to scale up production, expand cold storage and processing facilities and create jobs through its supply chain.

55

Slideshow: Subsole

A portion of the loan financed the construction of a photovoltaic plant, which was completed in April 2012. The 300 kWp (kilowatt peak) plant is one of the first installations of this type in the Atacama Desert.

56

Slideshow: Subsole

IDB’s support will allow Subsole to increase output by 60 percent between 2011 and 2014, benefitting 275 small and medium producers, creating over 10,000 direct and indirect jobs and ultimately, resulting in over 82,000 beneficiaries.

57

IDB looks for high-impact projects that contribute toward the Bank’s mission for economic and social development. Explore our project cycle to learn more.

PROCESS BUILT ON PARTNERSHIP

58

1

2

3

4

5

Eligibility

Proje

ct Monitoring

Approval Process

& Due D

iligen

ceMan

date

Let

ter

Disbursement

Closing/

A project can take between two to eight months and typically runs through five milestones: Eligibility, Mandate Letter and Due Diligence, Approval Process, Closing/Disbursement, and Project Monitoring.

Apply for Financing: www.iadb.org/scf

IDB Project Cycle

59

1

2

3

4

5

Eligibility

& Due D

iligen

ceMan

date

Let

ter

Disbursement

Closing/

Proje

ct Monitoring

Approval Process

IDB seeks high-impact projects supported by viable business

plans that contribute to the development of an IDB

borrowing member country.

Sign confidentiality agreement

Complete environmental and social project documents

Conduct integrity screening and sign integrity form

Determines eligibility of the project in eligibility review meeting

= Client= IDBEligibility

1

IDB Project Cycle

60

1

2

3

4

5

Eligibility

& Due D

iligen

ceMan

date

Let

ter

Disbursement

Closing/

Proje

ct Monitoring

Approval Process

IDB and client sign mandate letter, a formal commitment to advise on and arrange the

project financing. Once signed, due diligence begins.

Sign mandate letter; client provides analysis fees

Submit non objection letter request to the government of project location

Hire of external consultants (if applicable)

Begin credit and financial analysis

Carry out due diligence missions (social, environmental, financial and legal)

Publish project abstract, environmental and social strategy on IDB website

Conduct impact assessment (if applicable) with sponsor’s authorization

Negotiate and agree on term sheet

Mandate Letter & Due Diligence

2 = Client= IDB

IDB Project Cycle

61

1

2

3

4

5

Eligibility

& Due D

iligen

ceMan

date

Let

ter

Disbursement

Closing/

Proje

ct Monitoring

Approval Process

IDB Board of Executive Directors approves the project

and instructs the signing of the loan or guarantee.

Prepare loan proposal document with term sheet

Review quality and risks of the terms and conditions of the proposed loan

Approve the document

Publish revised project abstract and environmental and social management report on IDB website

Submit loan proposal to board of executive directors for consideration

3Approval Process

= Client= IDB

IDB Project Cycle

62

1

2

3

4

5

Eligibility

& Due D

iligen

ceMan

date

Let

ter

Disbursement

Closing/

Proje

ct Monitoring

Approval Process

The financial closing of the transaction may take place any time after board approval.

Once signed, the loan can be disbursed.

Reach agreement on loan documents

Approve final term sheet and legal agreements

Establish meeting of conditions precedent

Sign documents

Make first disbursement

44 Closing/ Disbursement

= Client= IDB

IDB Project Cycle

63

1

2

3

4

5

Eligibility

& Due D

iligen

ceMan

date

Let

ter

Disbursement

Closing/

Proje

ct Monitoring

Approval Process

During the life of the loan, IDB partners with clients to ensure successful project

execution and timely disbursements. IDB helps

track and report on projected development results.

Monitor compliance with contract requirements

Conduct annual site visits

Provide timely information (financial, technical, environmental, social)

Process disbursements

Make repayments

Track and report development results

5 Project Monitoring

= Client= IDB

IDB Project Cycle

64

OUR VISION GUIDES USOur financing solutions and capacity building products will enable our clients to improve the living standards for 15 million people, make climate and environmentally friendly investments and meet the funding needs of 250,000 SMEs by 2015.

65

CONTACT USContact an investment officer in Washington, D.C., USA or in the 26 country offices.

[email protected]

www.iadb.org/scf

66

67

Example

Business

financial institutions

financial intermediaries

financial needs

financial returns

financial markets division

business idb

purpose idb

financial market institutions