IDFC Corporate Presentation May 2010. · PDF fileIDFC Presentation May 2010 May 21, 2010 1 Any unauthorized disclosure, copying or distribution of the contents of this information

IDFC Presentation

May 2010

May 21, 2010 11Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited.

Indian Infrastructure

Brief History, Shareholding & Board

Strategy, Structure, Core Team and Businesses

Performance

Conclusion

May 2010 2

Huge Investments Over the Past Decade….but, Still a HUGE Deficit!

~US$436bn invested in infrastructure since 2003

Driving acceleration in GDP growth

Infrastructure investment (US$ bn)7888

Real GDP growth10.0%

3238 43

5359 63

708

22

44

66

4.0%

6.0%

8.0%

Power: 16% shortfall at peak demand; per capita usage at 10% of global average

Ports: Major ports operating at 95% capacity with demand growing at 10%

0FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

2.0%FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E

Ports: Major ports operating at 95% capacity, with demand growing at 10%

Roads: National and state highways are stretched beyond maximum capacitiesaverage trucks coverage of 200km per day (25% of the global average).

Railways: Both coverage and efficiency is lacking track length of 35km/1,000 sq km vs. global average of 125, average train speed 25km/hr vs. China’s 150km/hr.

Airports: Penetration is low (25% of Brazil’s, 20% of China’s, 2% of US’)efficiency beginning to improve

Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited. 3May 2010

Source: IDFC SecuritiesInfra investments... Not a choice, but a NECESSITY!

Infrastructure…Ambitious Plans & Aggressive Investments

The 11th Five-Year Plan (FY08-12) envisages investments of US$500 bn* in infrastructure

Initial projections for 12th Five-Year Plan (FY13-17) at ~US$1trn

100,000MW generation capacity addition

Port capacity to almost double; non-metro airports to see major push

Others1%

Ports & Airports

6%6%Water Supply &

Sanitation12%

Power35%

Total investments

US$500 bnIrrigation

13%

Dedicated Freight Corridor

Roads18%

Railways15%

40,000km of road development/expansion


Source: IDFC Securities*Excluding telecom

Infrastructure Spend to Rise to ~8% of GDP

8,000 8.0

GCF in Infrastructure (Rs bn - LHS)

% of GDP (RHS)

Actual investments, although lagging plan targets, have still been aggressive

6,000 7.0– and could have been higher but for

the global financial crisis

2,000

4,000

5.0%

6.0

0

FY07 FY08 FY09 FY10 FY11E FY12E FY13E FY14E FY15E

4.0

A secular uptrend in infrastructure investments

IDFC Securities sees total infrastructure spend of ~US$700bn over FY11‐15E


Source: IDFC Securities

Infrastructure…Increasing Private Sector Participation

Public investments to dominate spend, but private investments to grow 3x!

2,550

3,110

3,9008,000

Public Private

24% CAGR for private investments over FY10-15

1 2111,350

1,650

2,084

4 000

6,000

3 274 3,6504,100

4,100

1,211

2,000

4,000

2,237 2,516 2,9153,274 ,

0

FY09 FY10E FY11E FY12E FY13E FY14E FY15E


Source: IDFC SecuritiesFY09 FY10E FY11E FY12E FY13E FY14E FY15E




Performance

Conclusion

May 2010 7

History (1997-2009)History (1997 2009)

1997

♦ IDFC was founded on the recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan.

♦ IDFC, a Public Private Partnership, incorporated in Chennai. Government holds 40% of the company, 40% is held by foreign shareholders and the rest by domestic entities.

♦ IDFC commences business operations with a mission to lead private capital to commercially viable infrastructure projects.

2004 ♦ IDFC successfully raises $200 million for the India Development Fund, the first infrastructure focused private equity fund.

2005

♦ IDFC goes public through a successful public offering that is oversubscribed 38 times. Shares issued at Rs. 34 a share. Lists on the National and Bombay Stock Exchanges.

♦ Government shareholding reduces from 40% to 26%.

2007 ♦ IDFC raises additional capital of USD 500 million through a Qualified Institutional Placement at Rs. 127 a share. Government shareholding reduces to 23%.

2006 ♦ IDFC successfully raises $450 million for its second infrastructure focused private equity fund .

♦ Acquired controlling stake in SSKIq g♦ IDFC successfully raises $930 million India Infrastructure Fund (IDFC Project Equity) ♦ IDFC successfully raises $700 million for its third infrastructure focused private equity fund .♦ IDFC enters into asset management by acquiring the AMC business of Standard Chartered Bank in India.

♦ IDFC becomes part of Nifty 50

2008

2009

8

♦ IDFC becomes part of Nifty 50

May 2010

2009

Shareholding Pattern & Board of DirectorsShareholding Pattern & Board of Directors

Shareholding Pattern (March 31, 2010) Deepak Parekh, Non-executive Chairman, HDFC Non-executive Chairman

G. C. Chaturvedi, Additional Secretary

GoI20.2%

MF

Corporate Bodies3.0%

Retail9.6%

G. C. Chaturvedi, Additional Secretary, Department of Financial Services, Ministry

of Finance

S. S. Kohli

Abdul Rahim Abu Bakar, Chairman, UEM Builders Berhad, Opus Group Berhad

Nominees of Ministry of Finance, Government of

India

Nominees of Domestic andMF5.5%

Khazanah

Dimitris Tsitsiragos, Director – Global Manufacturing & Services, International

Finance Corporation

S. H. Khan

Nominees of Domestic and Foreign Institutional

Shareholders

FII / FDI45.4%

FIs / Insurance Co / Banks16.4%

Shardul Shroff

Gautam Kaji

Omkar Goswami

Donald Peck

R ji B L ll M i Di t & CEO

Independent Directors

Rajiv B. Lall Managing Director & CEO

Vikram Limaye Whole-time Director

9May 2010




Performance

Conclusion

May 2010 10

Strategygy

PPP Initiative

F db k

Advisory Group Project Finance

I t t

Private Equity

Project Equity

Project Finance

Investment Banking

Investment Banking

Asset Management

Project EquityIDFC Capital

Feedback Investment Banking Proprietary Equity Project Equity

g

Financial Ad i D bt E it R fi i Di t ib ti

EngineeringDesign

Agent Advisory Process Mgt.

Debt Equity Refinancing DistributionDesign Structuring Advice

Bidding Construction & Project Mgt. O&M Sale / ListingPrincipalProject preparation

IDFC Projects IDFC Projects IDFC Projects

Bidding Co st uct o & oject Mgt. Sale / Listingp preparation

IDFC is a one-stop-shop for all products and services across the infrastructure value chain

Pre-development Development Asset Maintenance Exit

11

IDFC is a one stop shop for all products and services across the infrastructure value chain

May 2010

Business Structure

SHARED SERVICESHR, IT, Finance & Accounts, Corporate Communications, Corporate

Corporate & Investment

Bank

PublicMarketsAsset

Management

AlternativeAsset

Management

IDFCFoundation

Management

• Balance Sheet : Rs 33,500 crore

• Project Finance,

• AUMs : Rs 26,500 crore

• Debt to Equity :

• AUMs : Rs 10,000 crore

• Private Equity,

• Capacity building, CSR and Policy

Treasury, Principal Investments, Investment Banking & Institutional Broking

• Debt Equity and Fee

Debt to Equity : 80:20

• Brand, Reach and Products

Project Equity and Fund-of-Funds

• Debt, Equity and Fee Based Services

THE NUMBER OF EMPLOYEES AT IDFC GROUP IS 575 : the largest pool of human talent focused on infrastructure in the country / region

12May 2010

on infrastructure in the country / region

Core TeamCore TeamRajiv Lall Managing Director and Chief Executive Officer

Vikram Limaye Executive Director, member of the Board of Directors

L.K. Narayan Group Chief Financial Officer

Sadashiv Rao Group Chief Risk Officer

Animesh Kumar Group Head Human Resources, Corporate Communication

Rajeev Uberoi Group Head Legal and Compliance

Shared Services

Vinayak Mavinkurve Group Head Project Finance

Sanjay Grewal Group Head Project Finance

Tapasije Mishra Group CEO, Investment Banking

Naishadh Paleja CEO Broking

Corporate & Investment Bank

j g

Public Mkt AMC Naval Bir Kumar CEO of IDFC AMC

Luis Miranda President and CEO of IDFC Private Equity

M. K. Sinha President & CEO of IDFC Project EquityAlternative Asset

Veronica John President & CEO IDFC Capital, Singapore

Pradeep Singh VC & MD IDFC Projects

Cherian Thomas Group Head of PPP Initiatives

Ritu Anand Principal Advisor Chief Economist

Management

IDFC Foundation

13May 2010

Ritu Anand Principal Advisor, Chief Economist

IDFC and the IFC contextIDFC and the IFC context

What are IFCs*?

NBFCs with a minimum of 75% of assets deployed in infrastructureNet owned funds of Rs3bn or more

A minimum credit rating 'A'; and With a CRAR of 15 % and a minim m Tier I capital of 10 %

Norms

With a CRAR of 15 % and a minimum Tier I capital of 10 %*Infrastructure Financing Companies

Exposure limit on-lending to infra projects up by 500bp to 25% of owned funds for single Easier exposure

norms

Exposure limit on lending to infra projects up by 500bp to 25% of owned funds for single borrower and to 40% for a single group of borrowers

SCBs permitted exposure of 15% to a single borrower and 25% to a single group of borrowers

Improving access to bank funds &

ECBs

Banks’ cap on lending to infra finance companies raised from 15% of capital funds (Tier 1+2) to 20%

Risk weights of banks’ exposure to IFCs linked to credit rating assigned to such NBFCs

Possibility to raise tax free infrastructure bonds

IDFC could be one of the few primary players in the space

14May 2010

Corporate and Investment Bank

One of the largest Infrastructure focused financial institutions

Corporate and Investment BankProject Finance

Dominant

Infrastructure Financier

Funded:

♦ Power plants of over 14,000 MW, including more than 600 MW renewable assets

♦ Road network of 1,200 km out of 7,600 km bid out by NHAI; 900 km of State roads

P th l h i i P tPresence across the value chain in Power sector

Pioneers in financing telecom tower business, assisted all major telecom operators

Infrastructure advisory to:

♦ State Governments in unbundling of state utilities

Domain Knowledge

♦ State Governments in unbundling of state utilities

♦ NHAI on model concession agreements for the road sector

♦ Various State Governments and Municipalities in urban planning

Corporate advisory:

♦ Hand-hold advisory for PPP infrastructure projects (generation, transmission etc)

Awards IDFC was ranked #7 in the global project finance league table published by Thomson Reuters for the period ending March 31st 2010.

15May 2010

Corporate and Investment BankProject Finance : Exposure & Outstanding Disbursements – Sectors


Exposure Outstanding Disbursements

Rs crore % Rs crore % Rs crore % Rs crore %

Energy 12,499 41% 16,800 38% Energy 8,217 36% 10,342 37%Transportation 7,307 24% 8,676 20% Transportation 5,793 25% 5,548 20%Telecom 3,344 11% 10,705 24% Telecom 3,252 14% 5,725 21%

March 31, 2009 March 31, 2010Sector Sector

March 31, 2009 March 31, 2010

Telecom 3,344 11% 10,705 24% Telecom 3,252 14% 5,725 21%Industrial & Commercial 3,390 11% 3,573 8% Industrial & Commercial 2,977 13% 3,280 12%Tourism 1,672 5% 958 2% Tourism 1,217 5% 764 3%Other misc 2,552 8% 3,129 7% Other misc 1,653 7% 2,227 8%

Total 30,764 43,842 Total 23,109 27,885Growth (Y o Y) 43% Growth (Y o Y) 21%

20,364

30,442

20,000

25,000

30,000

35,000

Gross Approval Gross Disbursement

Growth (Y-o-Y) 43% Growth (Y-o-Y) 21%

6,411

10,632

13,203

10,317

3,719

6,0457,357

12,006

8,085

12,962

0

5,000

10,000

15,000

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

16May 2010


IDFC Capital & IDFC Securities

ResearchIDFC Securities among India’s leading domestic stock broking housesIDFC-Securities among India s leading domestic stock broking housesStrong and independent Research

Analysts rated across sectorsKnown for contrarian calls Wide coverage of around 200 companies across 22 sectors

Consistently ranked as one of the best domestic wholesale brokerages

“Starmine Best Broker” for India Mid and Small Caps (2008)

Wide coverage of around 200 companies across 22 sectorsTeam with extensive industry experienceResearch franchise across sectors like infrastructure, banking and consumer goods

Institutional Broking

Global reach with clients across geographies

Pronounced “Best Local Brokerage for the last 20 years” by Asiamoney in its ‘Poll of Polls 2004’, ‘Poll of Polls 2009’

Investment BankingAmong India’s largest infrastructure-focused investment bank (M&A, debt syndication, capital market offerings, private equity)Successful track record of international fund raisingProduct expertise and franchise with investors complemented by IDFC’s balance sheet, corporate & government

17

relationships and domain knowledge

May 2010

Corporate and Investment BankCorporate and Investment Bank

Shapoorji IPallonji

18May 2010

Punj Lloyd Ltd

Corporate and Investment BankPrincipal Investing

C i


Comprises

Venture Capital Funds : Investments in our funds and other funds

Project Finance : Unlisted equity investments in infrastructure

Proprietary Investments : Listed equity investments in infrastructure

Financial : Include investments like NSE, ARCIL and STCI

Treasury : Debt investments

Strategy is to consistently support IDFC sponsored funds and to make co-investments

alongside fundsalongside funds

19May 2010

Public Markets Asset ManagementPublic Markets Asset Management

IDFC AMCAcquired in 2008 from Standard Chartered The only fund house to be voted twice as the “Best Acquired in 2008 from Standard Chartered

AUM of USD 5.6 billion (debt equity mix of

82:18) and is currently ranked 10 amongst

37 Indian AMCs.

T k d f 8

yDebt Fund Manager” by Business Standard

IDFC MF has been rated as the “Best Performing Fund House” by the ET Quarterly MF Tracker for Q1 &Track record of 8 years

No. of employees : 147, direct reach to 38

cities with an indirect presence in over 140

towns

Fund House by the ET Quarterly MF Tracker for Q1 & Q2 of FY 09-10

Business World & Business Standard voted Kenneth Business to include mutual funds, offshore

fund management / advisory, PMS and other

hybrid alternative products

Andrade (Head – Investments) as the “Smartest Fund Manager of the Year” for the year 2009

20May 2010

Alternative Asset ManagementAlternative Asset ManagementPrivate Equity

Established in 2002 as a wholly owned subsidiary of IDFC

Manages a corpus of USD 1.3 billion and is India’s largest and most active private equity fund focussed onManages a corpus of USD 1.3 billion and is India s largest and most active private equity fund focussed on infrastructure

The three funds under management are India Development Fund (USD 190 million), IDFC Private Equity Fund II (USD 440 million) and IDFC Private Equity Fund III (USD 700 million)

IDFC PE has made 30 investments across 26 companies and has had 6 exits

Major Investments include GMR Infrastructure, Gujarat State Petronet, Delhi International Airport, L&T Infrastructure Development, Manipal Universal Learning, Quippo Infrastructure, PV Technologies and Goodearth Maritime.

Won an award by the Infrastructure Investor, for the Asia Infrastructure Fund Manager of the year and the Asian Infrastructure Deal of the Year

Project EquitySet-up in 2007 as a wholly owned subsidiary of IDFC

Manages the India Infrastructure Fund of US$ 927 million

Invests primarily for the long term in infrastructure equity opportunities in assets/projects in India

Portfolio is expected to comprise operational, brownfield and greenfield assets/projects in core infrastructure sectors including transport, energy and utilities, telecommunications infrastructure and social infrastructure

21May 2010

Alternative Asset ManagementAlternative Asset Management

IDFC Global AlternativesEstablished in 2008 in Singapore to develop a fund of funds business

First fund will be a global emerging markets private equity fund-of-funds

Will focus mainly on Asia and the Commonwealth of Independent States (CIS)

Will focus its manager selection on those that provide expansion and buyout capital to middle market companies

IDFC ProjectsEstablished in 2008 to intermediate risk capital and capture potential upside from investing in early stage

infrastructure development

To focus on leveraging third party funds

Focus on power and roads

Disciplined and calibrated approach – one project at a time

22May 2010

IDFC FoundationIDFC Foundation

Policy Advocacy and Advisory

Across sectors over the yearsIndia Infrastructure Report – thematic

PPP Initiatives

Government Advisory ServicesJoint Ventures – iDeCK, U-DeC and DIMTSProject Development Fund – Triple IC it B ildi I CCapacity Building – I-Cap

Corporate Social Responsibility

• Responsible business practices and inclusive developmentResponsible business practices and inclusive development

23May 2010


Brief History of IDFC

Structure, Shareholding and Board

Strategy Core Team and BusinessesStrategy, Core Team and Businesses

Performance

Conclusion

24May 2010

FinancialsFinancials(% of avg total assets)

Particulars FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010Net Interest Income 3.7% 3.0% 2.8% 2.9% 3.1% 3.6%

Infrastructure 3.7% 2.9% 2.6% 2.4% 2.6% 3.3%Treasury 0.0% 0.1% 0.2% 0.5% 0.6% 0.3%y

Non-Interest Income 2.4% 2.2% 1.7% 2.6% 2.1% 3.0%Principal Investment 1.7% 1.3% 0.9% 0.9% 0.6% 1.1%Asset management 0.1% 0.3% 0.3% 0.2% 0.7% 0.9%Investment Banking 0.0% 0.0% 0.0% 0.8% 0.4% 0.6%

Loan related & other fees 0.6% 0.7% 0.5% 0.7% 0.4% 0.5%Oth I 0 1% 0 0% 0 1% 0 1% 0 1% 0 1%Other Income 0.1% 0.0% 0.1% 0.1% 0.1% 0.1%

OPERATING INCOME 6.2% 5.2% 4.7% 5.6% 5.2% 6.7%OPERATING EXPENSES 0.5% 0.5% 0.5% 1.1% 1.2% 1.8%

PRE-PROVISIONING PROFITS 5.7% 4.7% 4.1% 4.5% 4.0% 5.0%Provisions 0.9% 0.4% 0.1% 0.3% 0.5% 0.4%

PBT 4.8% 4.3% 4.0% 4.2% 3.5% 4.6%Less : Provision for Tax, Profit in

associate co, Minority interest, etc 0.3% 0.5% 0.7% 1.1% 1.0% 1.2%

PAT 4.5% 3.8% 3.3% 3.1% 2.5% 3.4%

Particulars FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010O ll S d 2 4% 1 8% 1 9% 2 1% 2 4% 2 8%Overall Spread 2.4% 1.8% 1.9% 2.1% 2.4% 2.8%

Cost to Income # 8.1% 10.2% 11.5% 19.2% 23.6% 26.0%Effective Tax Rate 6.4% 11.7% 20.1% 26.3% 27.7% 25.7%

Loan Loss Reserve Ratio 0.0% 2.3% 1.6% 1.1% 1.8% 1.8%Leverage (Closing) 3.8 x 4.7 x 6.2 x 5.0 x 4.8 x 4.8 x

RoE 17.2% 17.0% 17.7% 15.6% 12.5% 15.9%

25May 2010

# Cost to Income : Operating Cost / Operating Income

Robust Balance Sheet Business

US$9.3bnRs 438 425 mn

500,000US$ 5.0bn US$ 4 9bn

US$ 5.9bnRs 278,850 mn300,000

Robust Balance Sheet BusinessOutstanding Disbursements Total Exposure

US$2 6bn

US$ 3.7bnRs 174,930 mn

US$4.8bnRs 224,110 mn

US$6.7.2bnRs 340,005 mn US$6.5bn

Rs 307,640 mn

Rs 438,425 mn

200,000

300,000

400,000

Rs.

milli

on

US$ 1.7bn

US$ 2.4bnRs 113,560 mn

US$ 3.3bnRs 157,810 mn

$Rs 233,920 mn

US$ 4.9bnRs 231,090 mn

100 000

150,000

200,000

250,000

Rs.

milli

on

US$2.6bnRs 124,137 mn

0

100,000

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

RRs 80,060 mn

0

50,000

100,000


Energy38.3%

Commercial, Industrial & Tourism

8.2%

Tourism2.2%

Others7.1%Energy

37.1%Commercial, Ind

ustrial & Tourism11 8%

Tourism2.7%

Others8.0%

Outstanding Disbursements (Mar 31, 2010) Total Exposure (Mar 31, 2010)

TransportationTelecom

24.4%

8.2%

Transportation

Telecom20.5%

11.8%

p19.8%

Transportation19.9%

26May 2010

1 USD = Rs .47.12

Strong Operating Track Record

225250

Strong Operating Track RecordLeverage & RoE Net profit (USD MM)

17.2% 17.0% 17.7%15.6% 15.9% 6.0x

7.0x20.0%

6683

107

157 159

100

150

200

US$

mn

12.5%

3.8x

4.7x

6.2x

5.0x 4.8x 4.8x

2.0x

3.0x

4.0x

5.0x

6.0x

4 0%

8.0%

12.0%

16.0%

450

0

50


Borrowing profile (Mar 31, 2010) Operating income break-up

0.0x

1.0x

0.0%

4.0%


39

71

10

43

61

48

24

39

27

23

30

200

250

300

350

400

450

US$ m

n

Bonds / Debentures

59%Forex Loans

8%

Sub debt3%

Short Term15%

54 65 91147

196237

2628

28

46

26

11 5

79

12

0

50

100

150


U

Rupee Loans15%

8%

Duration (Mar 31 2010) : Assets – 1 95 years Liabilities – 1 75 years NII Principal Investment Asset Management

27

Duration (Mar 31, 2010) : Assets – 1.95 years, Liabilities – 1.75 years

May 2010


Brief History of IDFC

Structure, Shareholding and Board

Strategy Core Team and BusinessesStrategy, Core Team and Businesses

Performance

Conclusion

28May 2010

Uniquely Positioned CompanyUniquely Positioned CompanyUnique platform combining benefits of Government sponsorship, internationally diversified shareholder base and professional management to pursue business opportunities in the infrastructure space

Well poised to capitalize on the strong momentum in infrastructure investments

High profile Board and experienced management team with 575 professionalsg p p g p

Deep domain knowledge in the core infrastructure sectors of energy, transportation, telecom & industrial and commercial infrastructure

Focus on high ROE businesses including Asset Management, Investment Banking and Principal Investments

Strong track record of performance, consistent growth and execution of strategyg p , g gyTotal Assets – March 31, 2010 US$ 7.1 bn with 5 year CAGR of 29%Net Operating Income – FY2010 US$ 447 mn with CAGR (2005 - 2010) of 37%PAT – FY2010 US$ 225 mn with CAGR (2005 - 2010) of 28%Gross NPA : 0.4%, Net NPAs : 0.2%AUM – March 31, 2010 US$ 8.1 bn with 5 year CAGR of 112%

29

AUM March 31, 2010 US$ 8.1 bn with 5 year CAGR of 112%

May 2010

Thank YouThank You

Corporate & Investment Bank

Project Finance

Investment Banking

Instit tional Broking

IDFC

2nd - 6th Floor, Naman Chambers,

C32, G-Block,

Bandra Kurla Complex,

Bandra (East),Institutional Broking

Principal Investment

Treasury

Equity

Public Markets Asset Management

Mumbai 400 051

Tel: + 91.22.4222.2000

Delhi

IDFCPublic Markets Asset Management

Mutual Fund

Alternative Asset Management

Private Equity

Project Equity

The Capital Court,

2nd Floor,

Olof Palme Marg,

Munirka,

New Delhi - 110 067

Tel: + 91.11.4600.6100Project Equity

Global Alternatives

Projects

Foundation

Website: www.idfc.com

May 21, 2010 3030Any unauthorized disclosure, copying or distribution of the contents of this information is prohibited.

IDFC Corporate Presentation May 2010. · PDF fileIDFC Presentation May 2010 May 21, 2010 1 Any unauthorized disclosure, copying or distribution of the contents of this information

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