2010 Highlights - PROPARCO

PROPARCO’s finAnCing And COfinAnCingbetween 2007 And 2009 will COntRibute tO:

Connecting 345 000 people to an electricity supply network

Reducing annual greenhouse gas emissionsby 1.5 million CO2 eq tons

Supporting the SER processes

of 8 000 businesses

Connecting 43 million people to a telecoms network

Securing or creating 1 million jobs

Boosting State revenues by v650M every year

PublICaTIoNS

GEOGRAPHICAL AND SECTORAL brochures

• PRoPARCo in Sub-Saharan Africa• PRoPARCo in China• Financing access to sustainable energy • Supporting responsible microfinance• FISEA: Getting involved and investing in African businesses

FINANCIAL brochures

• PRoPARCo’s financial products in the Middle East• PRoPARCo’s financial products in Morocco• PRoPARCo’s financial products in Tunisia• PRoPARCo’s financial products in West Africa

PrIVate sector & DeVeLoPMent MaGaZIneTake out a free subscription to PROPARCO’s bimonthly magazine – a platform for debate on the role the private sector plays in developing countrieswww.proparco.fr

• N ˚ 5: Africa’s financial markets: a real development tool? • N ˚ 4: What are the economic and social impacts of the mobile phone sector

in developing countries? • N ˚ 3: What balance between financial sustainability and social issues

in the microfinance sector?• N ˚ 2: How can the private sector help provide access to drinking water

in developing countries?• N ˚ 1: SME financing in Sub-Saharan Africa

FILMsFilms about projects financed by PROPARCO (5 minutes long)

• Teatime in Gachege, Kenya• Sustainable cogeneration in Kenya• Financing private equity investment in Morocco• Financing microfinance in Morocco• South Africa: Supporting “Black Economic Empowerment” • Development and the private sector

websIteVisit our website: www.proparco.fr

Highlights2010151, rue Saint-Honoré - 75001 Paris

Tel.: +33 1 53 44 31 08 - Fax: +33 1 53 44 38 38www.proparco.fr

All our publications and films can be downloaded at www.proparco.fr, under Publications

PROPARCO COORDINATIONRaphaëlle de Maisonneuve and Benoît Verdeaux

GRAPHIC DESIGN AND CREATION

28, rue du Faubourg Poissonnière 75010 Paris - www.noise.frEditing and coordination: Lionel Bluteau, Jeanne Sophie Camuset.Art Direction: Dorothée Thomassin, Marion Pierrelée. Typographic design: Julien Desperiere, Adrien Ampuy.

Photoengraving: RVB Editions. Printed by: Vision Prod’

PHOTO CREDITS CoVER: Getty images / Alexander NesbittFLAPS: Nicolas Fornage. PAGE 3: Jean-Pierre Barral. PAGE 6: Nicolas Fornage.PAGE 7: Nicolas Fornage. PAGE 8: Didier Gentilhomme. PAGE 9: Chantal Régnault.PAGE 10: Tim Montorfani. PAGE 11 : Gregory Scopélitis. PAGE 12: Diwaco.PAGE 13: Emilie-Gang Huang. PAGE 14: Nicolas Fornage. PAGE 15: Benoît Verdeaux. PAGE 16: Chantal Régnault. PAGE 17: Jean-Pierre Barral. PAGE 18: Emilie-Gang Huang. PAGE 19: AFD.

This report has been printed using vegetal and non-mineral ink. Vegetal inks for pub-lishing mainly use soya and colza and have several advantages: they use renewable re-sources (sunflower, colza, soya and linseed oils), using them reduces carbon dioxide emissions and a comparative analysis between mineral oils and vegetable oils shows that the latter are easily biodegradable.

Legal deposit: June 2010

SÃO PAULO

LAGOS

NAIROBI

JOHANNESBURG

TUNIS

PARIS

CAIRONEW DELHI

BANGKOK

BEIJING

ABIDJAN

CASABLANCA

a global network

view point

What role does PROPARCO’s international networkplay vis-à-vis the Paris headquarters?

b y Flo ren ce Ki mata ,I NVE S TMENT o FFICER aT PRo PaRCo ’ S N aI Ro b I o FFICE

“Our role in the field is to implement PROPARCO’s financing activity. We identify investments that have high developmental impacts and are, at the same time, viable from a financial, social and environmental perspective. This requires us to tailor our approach to the local situation.

PROPARCO’s regional offices need to be strengthened in order to support its growth. This will ensure the company maintains the quality of the projects it finances. Having investment officers in the field is a major advantage for PROPARCO: it allows us to build up close and long-term relations with our clients.”

contacts

Morocco,Mauritania, algeria15, avenue Mers-Sultan20130 Casablanca, MoroccoTel.: (212) 522 29 53 97Fax: (212) 522 29 53 [email protected]

Amaury Mulliez

tunisiaImmeuble Miniar - Bloc B 3e et 4e étagesRue du Lac d’ourmia1053 Les Berges du LacTunis, TunisiaTel.: (216) 71 861 799Fax: (216) 71 761 [email protected]

Emmanuel Haye

southeast asiaExchange Tower, Unit 3501-0235th floor388 Sukhumvit Road, KlongtoeyBangkok 10110, ThaïlandTel.: (66) 02 663 6090 [email protected]

Pierre-Alain Pacaud (sept. 2010)

china7 Floor, Block C, East Lake Villas35 Dongzhimenwai AvenueDongcheng DistrictBeijing 100027, ChinaTel.: (8610) 84 51 12 00Fax: (8610) 84 51 13 [email protected]

Ariane Ducreux

southern asia1A Janpath New Delhi, 110 001 IndiaTel.: (91) 11 2379 3747 Fax: (91) 11 2379 [email protected]

BrazilEdificio Çiragan officeAlameda Ministro Rocha Azevedo 38 - 11 andar - cj.110401410-000 - São Paulo, SP - BrazilTel.: (55) 11 2532-4751 / 4752 / 4753 / 4750Fax: (55) 11 [email protected]

Christophe Blanchot

Middle eastMiddle East10 Sri Lanka StreetZamalekCairo, EgyptTel.: (202) 27 35 17 88Fax: (202) 27 35 17 90

Thomas Eloy

Paris151, rue Saint-Honoré75001 Paris, FranceTel.: (33) 1 53 44 31 08Fax: (33) 1 53 44 38 38

southern africaand MadagascarBallywoods office ParkIronwood House, 1st Floor29 Ballyclare Drive - Bryanston P.o. Box 786555 - Sandton 2146Johannesburg, South AfricaTel.: (27) 11 540 7100Fax: (27) 11 540 [email protected]

Sophie Le Roy

West africaBoulevard François Mitterrand01 BP 1814Abidjan, Côte d’IvoireTel.: (225) 22 40 70 40Fax: (225) 22 44 21 [email protected]

Julien Lefilleur

central africaand nigeriaMelrose office suitesPhoenix House Plot 26EAbdulrahman okeneClose off Ligali Ayorinde Street Victoria Island Lagos - NigeriaTel.: (234) 12705740

Charles-André Le Pape

east africaRoyal Ngao House - Hospital RoadP.o Box 4599500100 Nairobi, KenyaTel.: (254) 20 271 12 34 (254) 20 271 10 58Fax: (254) 20 271 79 [email protected]

Ghislain de Valon

PROPARCO was created over thirty years ago on the conviction that the private sectorplays a key role in the development of South countries.

The private sector is the main engine of growth and job creation and generates precious resources that allow States to ful-fil their role as regulators and wealth redis-tributors. It plays a key role in meeting en-vironmental and social challenges and is a vehicle - sometimes even an operator - for public policy by directly providing certain basic services. PROPARCO’s mission is to catalyse pri-vate investment in emerging and develo-ping countries with the aim of supporting growth, sustainable development and the Millennium Development Goals. It achieves this by supporting projects that promote access to finance for businesses and banks, create access to basic infra-structure and combat climate change.

PROPARCO has extended its business area to all countries eligible for official develop-ment assistance (as defined by the OECD), i.e. over a hundred and fifty countries in Africa, the Mediterranean, Asia, Eastern Europe and Latin America.PROPARCO has continued to play its role as a patient and responsible investor and has once again demonstrated by the im-pacts of its financing and its financial re-sults that development and profitability go hand in hand.

LONG-TERMINVESTMENTIN THE SOUTH

PROPARCO is a development finance institution with a governance structure that sets it apart from its European partners. It gathers thirty private and public shareholders from both the North and South that all share a common commitment to development.

A NORTh/SOuTh pLATfORMOf pUblIc/prIvaTE INvESTOrS

Long-term investment in the South4

a420M

French financial institutions

International financial institutions

26 %

11 %

BPCEBNP ParibasCrédit agricole SACDC Entreprises élan PMECofaceBPCE International et OutremerNatixis Société générale

Aga Khan Fund for Economic DevelopmentBMCE BankBanque de TunisieBank of AfricaWest African Development BankDevelopment Bank of Southern AfricaDEG

Agence française de développement

59 %

Mr. Xavier de BayserIDEAMNatixis Solidaire

Funds and ethical foundations

1 %

French companies

3 %BouyguesBouygues constructionDollfus Mieg & CieGDF SuezSagaSaur InternationalSES SASociété internationale de plantations d’hévéasSocotec internationalSomdiaa Veolia

Capital breakdown:

ShARp RISE IN rESUlTS

BouyguesBouygues constructionDollfus Mieg & CieGDF SuezSagaSaur InternationalSES SASociété internationale de plantations d’hévéasSocotec internationalSomdiaa Veolia

balance sheet (in €M)

887en 2005

950en 2006

987en 2007

1 984en 2009

1 629en 2008

in €M in %

non-perforMing loans

36in 2005

53in 2003

5.5%

8.1%

12.7%

4.5% 4.5%

3.9%

2.6%

32in 2006

41in 2004

33in 2007

37in 2008

31in 2009

incoMe (in €M)neT bAnking inCOMe neT inCOMe

inCOMe fROM ORdinARy ACTiviTies befORe TAx

17

12

2523

27

35

30

2421

23

42

52

33

24

15

10

in 2005in 2004 in 2006 in 2007 in 2008 in 2009

129

coMMitMents (in €M)fOReign COunTRies fRenCh OveRseAs

TeRRiTORiesAfd sub-PARTiCiPATiOn fiseA

285

85 54

4268

172

65

33

314 488 552 766

30

62

263

1 121in 2009

789in 2008

598in 2007

401in 2006370

in 2005

PROPARCO’s results in this period of international crisis have proved that its economic model based on patient and responsible investment works.

5Long-term investment in the South

prOparcO now active on four continents

The company continues to have an open and multi-sectoral mandate to support growth in its traditional geographical areas: Africa, the Caribbean, the Mediterranean and the Indochinese peninsula. Its business in the other geographical areas - Asia, Latin America, Eastern

Europe and the Balkans - is based on four core sectors which are in line with the areas of activity of France’s official development assistance: climate change, the agribusiness industry, social sectors and microfinance.

PROPARCO tailors its approach to the regions where it operates. Its business area is now global, but Africa continues to be its first priority.

PROPARCO has extended its business area to all developing countries.

ProCredit Group has built up one of the leading microfinance networks.it gathers twenty-two subsidiaries located in Africa, Latin America and eastern europe. its core mission is to provide a range of productive credit and other banking services to micro, small and

medium-sized enterprises, as well as to private clients with low and modest incomes. ProCredit’s innovative approach is shaped by its business model as a socially responsible local bank seeking to combine transparency, effectiveness and profitability. following the extension of

its business area, PROPARCO allocated two successive €10M financings to this key partner, the first in equity, the second in subordinated notes. This investment aims to promote access to credit and savings for those that are excluded from the classic banking system.

SUPPORTING A MICROFINANCE NETWORKA LEADER ON THREE CONTINENTS

MEETINGThE ChALLENGESOf EacH rEGION

> FIND OUT MORE ABOUT THIS PROJECT AT WWW.PROPARCO.FR

Africa: a priority

PROPARCO’s financing in Africa focuses on the main engines of sustainable growth: developing infrastructure, supporting local entrepreneurs, supporting financial interme-diation and promoting high social and envi-ronmental standards. in 2009, its commit-ments in sub-saharan Africa reached €415M (i.e. a 48% rise compared to 2008). PROPARCO also implements the investment and support fund for businesses in Africa, one of the main mechanisms of the french initiative

for growth and employment in Africa. Operations financed by PROPARCO in Africa over the past three years will contribute to hooking up 290 000 people to an electricity network, connecting 26 million others to a telecoms network, securing 225 000 jobs and generating 300 MW of renewable energy.

Africa is highly exposed to the risks of the global economic environment.This has been underscored by the recent crises. PROPARCO’s priority, more than ever before,is to support growth in Africa.

A key criterion - and a security - for an investor is to be able to assess the risk of an investment.Africa’s financial markets are not very developed. This type of information is consequently essential, yet the continentis neglected by rating agencies.global Credit Rating - a subsidiary of the agency duff & Phelps - initially conquered the south African market, then extended its activities to Zambia, Zimbabwe, nigeria and kenya.global Credit Rating now aims to develop its activity in West Africa.

PROPARCO has taken a 10% stake in the agency’s capital in order to support its growth and give it greater credibility on this new market. PROPARCO is consequently helping both to improve the level of financial information in Africa and the way financial markets operate.

> FIND OUT MORE ABOUT THIS PROJECTAT WWW.PROPARCO.FR

ENHANCING FINANCIAL INFORMATIONIN AFRICA

7

Growth and employment in the Mediterranean

The southern and eastern Mediterranean re-gion has to face the dual challenge of regional integration with its northern bank and em-ployment needs brought about by its young and swiftly growing population. PROPARCO is traditionally the most ac-tive development finance institution in the Mediterranean. it had previously focused its activity on the Maghreb region and its prio-rity now is to develop in the Middle east via its traditional business activities in the region: private equity investment, the banking sector and mega industrial or infrastructure projects. it plays an important role in the union for the Mediterranean by supporting sMes.The launch of Averroes finance ii - co-mana- ged with CdC entreprises - underscores once more PROPARCO’s aim to support private equity investment in the region.

The Mediterranean is one of PROPARCO’s top priorities and it has scaled up its presence in the field withthe opening of an office in Cairo.

SUPPORTING THE AGRIBUSINESS INDUSTRY IN EGYPT

Wadi Holdings, an Egyptian company, is one of the biggest producers of chicks and poultry feed in Egypt and Sudan. it has also diversified its activity towards major export products, such as olives and glass. The company stands out for the way in which it pays particular attention

to sanitary issues. This allowed it to successfully resist the impacts of avian flu in 2006. Wadi aims to pursue its strong growth in the future. PROPARCO has taken a $3M equity stake in the company’s capital in order to support its development. by making this investment, PROPARCO has

decided to support a player that has model practices in terms of health standards. it is consequently helping to secure the agribusiness industry in egypt on which 600 000 farmers rely. The project will also have an impact by supporting export activities and growth.


Meeting the challenges of each region8

Green and inclusive growth in asia, Eastern Europe and latin america

PROPARCO has extended its business area to all developing countries. Its mandate in these geo-graphical areas is to support the private sector by reconciling two key areas: environmental balance and reducing inequalities. PROPARCO has conse-quently chosen to focus its efforts on four sectors, which already account for almost half of its activity

in its traditional geographical areas:• the fight against climate change;• the agribusiness industry;• social sectors (health and higher education);• microfinance.

PROPARCO finances business start-ups or development and helps build their competitiveness at the regional level.from 2010, PROPARCO’s activities will be based on three cornerstones: the regional integration of private players; the support for local banks; the development of innovative and structuring projects in the infrastructure sector.

PROPARCO promotes growth that meets both the climate challenge and reduces inequalities in Asia, Eastern Europe and Latin America.

AFD Group has a specific mission to help strengthen the economies of the French Overseas Territories.

Regional integration in the French Overseas Territories

9Meeting the challenges of each region

promoting access to credit

fOuR pRIORITYSEcTOrSPROPARCO focuses its activities on four priority sectors. It finances basic infrastructure, supports business development, promotes widespread access to credit and helps combat climate change.

PROPARCO has fully played its countercy-clical role during the specific context of the financial crisis. Indeed, in 2009 PROPARCO committed €445M for financial institutions in the form of loans and equity investments. Its equity investment activity reached an all-time high in order to shore up the solvency of banks. PROPARCO’s aim in this sector is to consolidate its presence in Africa, con-tinue to have a multi-product approach and strengthen its capacities to operate in the microfinance sector.

PROPARCO supports banks and financial systems in developing countries, thus giving bankingand financial players the means to boost their countries’ economic fabric themselves.

ViewpOinT

Why are banks reluctant to lend to SMEs?

“Banks, for their part, have at least three significant shortcomings. The first is their weakness in supervising their portfolios. The second shortcoming stems from the fact that banking teams lack a specific reference framework based on in-depth experience of SME financing. Finally, the third shortcoming is related to the institutional environment where deficiencies penalize banking activities.”

Extract from the article “The difficulties banks face in financing SMEs in Sub-Saharan Africa: who is to blame?» in the magazine Private Sector & Development, May 2009.

b y pauL d e RReMaux chair manand chief Executi ve O ff icer of bank of afr ic a Group

> DOWNLOAD THE MAGAzINE AT WWW.PROPARCO.FR

Supporting businesses

PROPARCO supports:• major industrial groups seeking to set up

in business in difficult areas;• major regional groups seeking to scale

up the development of their activity;• medium and large local enterprises that

contribute to transferring skills, creating jobs and complying with environmental and social standards.

In 2009, the corporate finance activity reached €154M. The main beneficiaries were the sectors of agribusiness, construc-tion materials, health and higher education.

In order to promote growth in South countries, PROPARCO supports business development by directly allocating long-term resources.


With 90% of cultivated land used for rice growing, Cambodia is one of the world’s largest rice producers. Although the country exports its domestic consumption surplus, it only gains a very low added value because the bulk of Cambodian paddy rice is exported in neighbouring countries. At the same time,there has been heavy pressure on rice

prices since 2008 which has led to serious difficulties for importing countries to be supplied.This was the case forReunion island which experienced a serious food crisis in 2008. soresum, a major player in Reunion island’s mass marketing industry, wanted to invest in the Cambodian golden Rice company in order to secure its supplies.

The project, which is supported by $7M of PROPARCO financing, involves building and operating a new production and processing unit. The project consequently has a dual impact: it is helping to create an organised industry in Cambodia. it is also securing Reunion island’s rice supply and preserving jobs in the industry.

DEVELOPING RICE PRODUCTION:REUNION ISLAND AND CAMBODIA REAP THE BENEFITS

11

Projects supported in this activity aim to pro-mote the development of market-oriented agricultural production, profitable farms and production diversification.

financing infrastructure

One of PROPARCO’s core missions is to up-grade the quality of infrastructure and make it widely accessible. PROPARCO finances in-frastructure projects in the sectors of trans-port, telecoms and energy. During the 2009 financial crisis, PROPARCO received an enor-mous amount of financing requests due to the

squeeze on banking sector resources and the subsequent need to complete finance plans for mega projects. Its business consequently more than doubled with commitments in this sector rising from €150M in 2008 to some €400M in 2009, including a €100M participation in the crisis-response initiative for infrastructure.

Ineffective infrastructure is often seen as a stumbling block to the development of South countries.


FINANCING WATER SUPPLY IN THE CITY OF AMMAN IN JORDAN

Jordan is one of the ten cities to be the most affected by a water shortage.Cities are the first victims, particularly Amman whose inhabitants only have access to water twice a week. The best medium-term alternative for raising the amount of available water in the capital is to use water from the disi aquifer. in order to allow this water supply project to come into being, PROPARCO and Afd

allocated two $100M loans for a project to convey water from disi to Amman (320km away) thanks to the construction and operation of a drinking water supply system. 100 million m3 of water reserves will be withdrawn from the disi fossil aquifer over the next 50 years. Amman’s 2.5 million inhabitants will consequently have access to water. some water resources which are currently overexploited will be preserved.

Four priority sectors12

combating climate change

PROPARCO enjoys technical expertise and references in each of the renewable energies. PROPARCO finances for instance wind farms, hydropower plants, photovoltaic industry, ba-gasse cogeneration unit and biogas projects. PROPARCO makes every effort to ensure that

these skills are transferred to our partner banks in the South and develops standard product of special climate lines of credit to banks. Roughly a quarter of its commitments for the year has been dedicating to climate change mitigation projects, i.e €275M.

PROPARCO has been dedicating a large part of its activities to combating climate changefor several years now.


Brazil is home to 60% of the Amazonian Rainforest and has been suffering from serious deforestation for several decades. 17.5% of its initial forest surface area has now disappeared. Cikel brasil verde Madeiras is one of the main integrated forest groups in brazil. in addition to exploiting three native Amazonian forests covering an area of 400 500 ha, Cikel stands out because it produces fsC eco-certified wood and as such is one of

the few players in brazil to exploit forests in a sustainable manner. PROPARCO has decided to encourage Cikel’s model approach by financing its forest and industrial investment program for the next two years via a $20M senior loan.The project will reduce emissionsby 550 000 tons of CO2 eq every year and will support an industry that creates jobs and added value while at the same time maintaining forest cover.

PROMOTING SUSTAINABLE FOREST EXPLOITATIONIN AMAzONIA

13Four priority sectors

Enhancing impact measurementPROPARCO’s first impact measurement tool supports the financing decision prior to the in-vestment. It is used by most European develop-ment finance institutions. In order to have a more comprehensive un-derstanding of the impact of all its operations, PROPARCO creates and publishes a series of sec-toral indicators in common with AFD. This pro-cess is in line with PROPARCO’s commitment to be accountable for its contribution to the overall efforts made under France’s official develop-ment assistance policy and allows it to measure the effectiveness of its projects. PROPARCO’s fi-nancing over the past three years will contribute to connecting 345 000 people to an electricity supply network, connecting 43 million others to

a telecoms network, securing 1 million jobs, sup-porting the SER processes of 8 000 businesses and reducing annual greenhouse gas emissions by 1.5 million CO2 eq tons.Finally, capitalisation studies are conducted on certain projects financed by PROPARCO or cer-tain sectors of activity. The magazine published by PROPARCO - Private Sector & Development - gathers and compares the opinions of specialists, experts and practitioners with one topic per is-sue. It is a platform for exchanges and reflection where ideas can be compared and headway can be made on these topics.

SElEcTING prOJEcTSfOR ThEIR IMpACTSPROPARCO’s day-to-day business combines three skill areas which together shape its activity: measuring and managing the impact ofthe projects it finances, its commitment to SER and risk management for its operations.

promoting social andenvironmental responsibility (SEr)

Compliance and risk management

PROPARCO’s operations are subject to an assess-ment of the environmental and social risks they are likely to cause. The aim of this process is to help its partners improve the environmental and social

quality of their projects. AFD Group has set up a special team. Through its financing, PROPARCO aims to disseminate SER practices and raise its clients’ awareness of them, particularly banks.

PROPARCO is a financial institution and as such is subject to banking regulations.The Company has implemented a series of mechanisms that allow it to manage its operations and the inherent risks: • applications for financing are examined by three

different committees and by different inde-pendent departments;

• AFD’s Permanent and Compliance Control Department coordinates and supervises the in-ternal control and makes a second-level control on the risk of non-compliance;

• PROPARCO is also audited by AFD’s Inspectorate General Department.

businesses in developing countries sometimes lack capacities which can lead to poor perfor-mance. Their need for financing may be widely recognised, but it is also necessary to meet their needs in terms of technical assistance. in the framework of fiseA, Afd has decided to earmark €5M to finance consultant missions (to improve information systems, marketing, human resources, etc.) in order to support the businesses in which the fund will be inves-ting. in 2009, €150 000 were allocated to the Africinvest financial sector fund for tech-nical assistance provided to the finan-cial institutions in its portfolio.

Meeting the needfor business upgrading

15

Investing in equity

PROPARCO always acquires minority stakes which are destined to be transferred after a five to eight year period. PROPARCO uses a wide range of equity tools: equity, preference shares, convertible bonds and participation loans.

In 2009, PROPARCO made twenty-one equity investments totalling €74M, mainly in the ban-king sector. In addition to its investments in other funds, FISEA also makes direct equity invest-ments in businesses.

PROPARCO promotes the development of businesses and banks by directly investing in their capital.

FiSea: a new equity financing solutionin sub-saharan africafiseA is an investmentfund that takes equity participations in businesses, banks, microfinanceinstitutions and investment funds operating insub-saharan Africa.it is one of the key mechanisms of the french initiative for growth and employment in Africa

launched by the french President in february 2008. fiseA’s capital endowment was provided by Afd.Project appraisal and management have been entrusted to PROPARCO.fiseA aims to be com-plementary to traditional private funds and focuses on investments that carry

a higher risk in unstable or post-crisis regions. it makes small investments insectors that are traditionally neglected. The fund has a €50M annual investment target over a five-year period. in 2009, 13 projects were approved totalling €62.3M.

MEETING INVESTORS’ fINANCIAL NEEDSPROPARCO provides a full range of financial products tailoredto the specific needs of investors in South countries.

Supporting private equity investment

PROPARCO’s private equity investment activity allows it to scale up the impact of its action to boost employment and wealth creation in the economies it supports. In 2009, it invested €100M in funds, which in turn invested €1.2bn in 242 businesses. These invest-ments mainly benefit Sub-Saharan Africa and sup-

port SMEs, the agribusiness industry, basic infra-structure and microfinance. Two new funds have recently been launched: the Investment and Support Fund for Businesses in Africa (FISEA) and Averroes Finance II, which aims to support private equity investment in the Mediterranean region.

PROPARCO is a forerunner in private equity investment in some regions.It provides long-term support to independent local fund management teams.

> FIND OUT MORE ABOUT THE FANISI PROJECT AT WWW.PROPARCO.FR

“SMEs have limited access to the financing they need. This is the main stumbling block to the development of the sector in East Africa. Unlike micro-enterprises and major corporates, SMEs very often have to resort to investors or financial institutions that are not specialists in this sector. SME managers also lack knowledge of the business world and financial markets. Fanisi Capital combines an SME financing activity with a ca-pacity building activity for managers. The aim is to turn East African SMEs into competitive players in the region”.In 2009, FISEA participated in Fanisi’s first close for an amounttotalling $10M, alongside its Norwegian and Finnish counterparts.

View pOinT

What approach does the Fanisi Fund taketo private equity investment?

b y ay i Si MakaTia n i , venture c apit al f und manager

17

Medium and long term lending

in addition to its cofinancing and risk-sharing mechanisms with other european development agencies, PROPARCO benefits from a sub-par-ticipation agreement with Afd, which allows it to increase its lending capacity. PROPARCO con-sequently offers loans ranging between €5M and €100M with maturities of between five and twenty years. In order to support a client over

such a long period, PROPARCO needs to be able to adapt its range of products which includes mechanisms to reduce or extend maturities de-pending on exogenous parameters. PROPARCO also offers a wide range of loan products: senior, subordinated or participation loans and an in-creasing number of junior products.

PROPARCO’s products are complementary to those of local or international private banks. Its strategy for its lending activity is to be a long-term investor.

PROMOTING FINANCING FORMODEL ENVIRONMENTAL PROJECTSIN BRAzIL


Banco Fibra is a young Brazilian bank whose core activity is to finance SMEs.it now has some 1 100 clients. PROPARCO has supported this young and budding bank by allocating it a $30M senior loan, including $10M of Afd sub-participation. This line of credit is earmarked to finance investments in model environmental projects: clean energy, green transport (ethanol), reducing greenhouse gas emissions and protecting the Amazon Rainforest. This is the first line of credit that PROPARCO has directly allocated in brazil. it will also allow the bank to calculate the carbon balance of its investments.

Metting investors’ financial needs18

Developing productsin local currency

PROPARCO works in partnership with other do-nors to develop local currency markets by offering guarantees, direct loans in local currency and swaps in exotic currencies. PROPARCO also directly seeks resources in local currency from commercial banks. In 2009, PROPARCO was consequently able to offer its clients CFA francs, South African rand, Indian rupees and Tunisian dinars.

A great many projects require financing in local currency. Without such financing , clients have to face a foreign exchange risk sometimes simply cannot manage.


Senegal has the second largest banking system in West Africa after Côte d’Ivoire. it is also highly competitive yet the rate of access to banking services remains low (under 10%). The banque internationale pour le Commerce et l’industrie au sénégal (biCis), the country’s third largest bank with 17% of the market, is bnP Paribas’ subsidiary in senegal.The bank is specialised in the private customer, institutional and corporate segments and seeks long-term resources

in order to shore up its balance sheet and back the maturity of its resources to that of its loans. in 2009, PROPARCO granted biCis an fCfA6.7bn line of credit with a seven year maturity.by providing long-term financing in local currency, PROPARCO has helped the bank avoid a foreign exchange risk and is giving senegalese businesses the resources they need to invest in their growth.

LONG-TERM FINANCING FOR A SENEGALESE BANK IN LOCAL CURRENCY

19Metting investors’ financial needs

OpEraTIONal aND fINaNcIalRESuLTS

In FY 2009, PROPARCO’s total commitments in loans and equity investments reached €1 121M,up 42% on 2008 (€789M).This extremely good result can be explained by a combination of several factors. First, there was a sharp rise in sub-participation investments with AFD as a result of closer partnerships being forged (€262M of commitments in 2009) and cofinancing with the other European and multi-lateral development institutions (€100M of com-mitments). Second, the geographical expansion of PROPARCO’s activities led to an increase in

operations in Asia and Latin America. Finally, the 2009 international financial crisis created a number of investment opportunities in the financial sector, particularly in the major emerging countries.It is also worth noting that PROPARCO made a €62M equity investment on behalf of the FISEA fund (Investment and Support Fund for Businesses in Africa launched in April 2009).

Equity activity

Lending activity

• 22 equity investments were approved in 2009 for a total of €111M

• At 31.12.2009, the gross value of PROPARCO’s equity portfolio and other shareholdings stood at €269M for 92 shareholdings, in-cluding 46 investment funds, 19 financial es-tablishments and insurance companies, 10 in-dustrial and commercial companies, 3 hotels and 5 infrastructure and mining companies

• Sub-Saharan Africa remains the main area for PROPARCO’s activities (26%), followed by the Mediterranean / Middle East (21%) and Asia (21%)

• The FISEA fund authorised 13 projects for a to-tal of €62M, exclusively in Sub-Saharan Africa

• 47 loans were approved in 2009 totalling €947M in gross approvals

• At 31.12.2009, gross outstanding loans to-talled €1 386M and break down between banking establishments (56%) and loans to non-financial institutions (44%)

• Sub-Saharan Africa is the main area to benefit (47%), followed by the Mediterranean (30%), Asia (17%) and Latin America (7%)

geographical breakdown of total portfolio (loans and equity investments) in foreigncountries (as % of total portfolio)

breakdown of commitmentsby product (in €m)

LOAns And guARAnTeesPROPARCO equiTy invesTMenTsLOAns On behALf Of ThiRd PARTiesfRenCh OveRseAs TeRRiTORies

Afd-sub-PARTiCiPATiOnfiseA

216in 2004

370in 2005

401in 2006

598in 2007

789in 2008

1 121in 2009

193

185

252

33

85

254 410 458 655

60

7894

33

68

32

65

62

263

30

54

42

140

111

21

29% Mediterraneanand Middle East

44% Sub-SaharanAfrica

17% Asia

4%Multi-country

6%Latin America and Caribbean

AssetsRECEIvABlES FROM FInAnCIAl InStItutIOnS 780

RECEIvABlES FROM COMPAnIES 637

EquIty InvEStMEntS 264

SHORt And lOnG-tERM InvEStMEntS 296

OtHER 7

total 1 985

Net bANkiNg iNcome 51.6

OvERHEAdS - 22.7

COSt OF RISk -3.6

GAInS/lOSSES On ASSEt SAlES 7.4

CORPORAtE InCOME tAx -8.8

Net iNcome 23.6

LiAbiLitiesEquIty CAPItAl 525

Incl. subscribed capital 420

Incl. share premium and legal reserve 81

Incl. result 24

dEBtS 1 296

tHIRd-PARty SuB-PARtICIPAtIOn 35

nOn Fully-PAId uP InvEStMEntS 84

PROvISIOnS FOR COllECtIvE RISk 33

OtHER 12

total 1 985

Simplified balance sheet in net values at 31 December 2009 (in thousands of euros)

Simplified income statement(in thousands of euros)

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PROPARCO COORDINATIONRaphaëlle de Maisonneuve and Benoît Verdeaux

GRAPHIC DESIGN AND CREATION

28, rue du Faubourg Poissonnière 75010 Paris - www.noise.frEditing and coordination: Lionel Bluteau, Jeanne Sophie Camuset.Art Direction: Dorothée Thomassin, Marion Pierrelée. Typographic design: Julien Desperiere, Adrien Ampuy.

Photoengraving: RVB Editions. Printed by: Vision Prod’

PHOTO CREDITS CoVER: Getty images / Alexander NesbittFLAPS: Nicolas Fornage. PAGE 3: Jean-Pierre Barral. PAGE 6: Nicolas Fornage.PAGE 7: Nicolas Fornage. PAGE 8: Didier Gentilhomme. PAGE 9: Chantal Régnault.PAGE 10: Tim Montorfani. PAGE 11 : Gregory Scopélitis. PAGE 12: Diwaco.PAGE 13: Emilie-Gang Huang. PAGE 14: Nicolas Fornage. PAGE 15: Benoît Verdeaux. PAGE 16: Chantal Régnault. PAGE 17: Jean-Pierre Barral. PAGE 18: Emilie-Gang Huang. PAGE 19: AFD.

This report has been printed using vegetal and non-mineral ink. Vegetal inks for pub-lishing mainly use soya and colza and have several advantages: they use renewable re-sources (sunflower, colza, soya and linseed oils), using them reduces carbon dioxide emissions and a comparative analysis between mineral oils and vegetable oils shows that the latter are easily biodegradable.

Legal deposit: June 2010

SÃO PAULO

LAGOS

NAIROBI

JOHANNESBURG

TUNIS

PARIS

CAIRONEW DELHI

BANGKOK

BEIJING

ABIDJAN

CASABLANCA

a global network

view point

What role does PROPARCO’s international networkplay vis-à-vis the Paris headquarters?

b y Flo ren ce Ki mata ,I NVE S TMENT o FFICER aT PRo PaRCo ’ S N a I Ro b I o F F I C E

“Our role in the field is to implement PROPARCO’s financing activity. We identify investments that have high developmental impacts and are, at the same time, viable from a financial, social and environmental perspective. This requires us to tailor our approach to the local situation.

PROPARCO’s regional offices need to be strengthened in order to support its growth. This will ensure the company maintains the quality of the projects it finances. Having investment officers in the field is a major advantage for PROPARCO: it allows us to build up close and long-term relations with our clients.”

contacts

Morocco,Mauritania, algeria15, avenue Mers-Sultan20130 Casablanca, MoroccoTel.: (212) 522 29 53 97Fax: (212) 522 29 53 [email protected]

Amaury Mulliez

tunisiaImmeuble Miniar - Bloc B 3e et 4e étagesRue du Lac d’ourmia1053 Les Berges du LacTunis, TunisiaTel.: (216) 71 861 799Fax: (216) 71 761 [email protected]

Emmanuel Haye

southeast asiaExchange Tower, Unit 3501-0235th floor388 Sukhumvit Road, KlongtoeyBangkok 10110, ThaïlandTel.: (66) 02 663 6090 [email protected]

Pierre-Alain Pacaud (sept. 2010)

china7 Floor, Block C, East Lake Villas35 Dongzhimenwai AvenueDongcheng DistrictBeijing 100027, ChinaTel.: (8610) 84 51 12 00Fax: (8610) 84 51 13 [email protected]

Ariane Ducreux

southern asia1A Janpath New Delhi, 110 001 IndiaTel.: (91) 11 2379 3747 Fax: (91) 11 2379 [email protected]

BrazilEdificio Çiragan officeAlameda Ministro Rocha Azevedo 38 - 11 andar - cj.110401410-000 - São Paulo, SP - BrazilTel.: (55) 11 2532-4751 / 4752 / 4753 / 4750Fax: (55) 11 [email protected]

Christophe Blanchot

Middle eastMiddle East10 Sri Lanka StreetZamalekCairo, EgyptTel.: (202) 27 35 17 88Fax: (202) 27 35 17 90

Thomas Eloy

Paris151, rue Saint-Honoré75001 Paris, FranceTel.: (33) 1 53 44 31 08Fax: (33) 1 53 44 38 38

southern africaand MadagascarBallywoods office ParkIronwood House, 1st Floor29 Ballyclare Drive - Bryanston P.o. Box 786555 - Sandton 2146Johannesburg, South AfricaTel.: (27) 11 540 7100Fax: (27) 11 540 [email protected]

Sophie Le Roy

West africaBoulevard François Mitterrand01 BP 1814Abidjan, Côte d’IvoireTel.: (225) 22 40 70 40Fax: (225) 22 44 21 [email protected]

Julien Lefilleur

central africaand nigeriaMelrose office suitesPhoenix House Plot 26EAbdulrahman okeneClose off Ligali Ayorinde Street Victoria Island Lagos - NigeriaTel.: (234) 12705740

Charles-André Le Pape

east africaRoyal Ngao House - Hospital RoadP.o Box 4599500100 Nairobi, KenyaTel.: (254) 20 271 12 34 (254) 20 271 10 58Fax: (254) 20 271 79 [email protected]

Ghislain de Valon

PROPARCO’s finAnCing And COfinAnCingbetween 2007 And 2009 will COntRibute tO:

Connecting 345 000 people to an electricity supply network

Reducing annual greenhouse gas emissionsby 1.5 million CO2 eq tons

Supporting the SER processes

of 8 000 businesses

Connecting 43 million people to a telecoms network

Securing or creating 1 million jobs

Boosting State revenues by v650M every year

PublICaTIoNS

GEOGRAPHICAL AND SECTORAL brochures

• PRoPARCo in Sub-Saharan Africa• PRoPARCo in China• Financing access to sustainable energy • Supporting responsible microfinance• FISEA: Getting involved and investing in African businesses

FINANCIAL brochures

• PRoPARCo’s financial products in the Middle East• PRoPARCo’s financial products in Morocco• PRoPARCo’s financial products in Tunisia• PRoPARCo’s financial products in West Africa

PrIVate sector & DeVeLoPMent MaGaZIneTake out a free subscription to PROPARCO’s bimonthly magazine – a platform for debate on the role the private sector plays in developing countrieswww.proparco.fr

• N ˚ 5: Africa’s financial markets: a real development tool? • N ˚ 4: What are the economic and social impacts of the mobile phone sector

in developing countries? • N ˚ 3: What balance between financial sustainability and social issues

in the microfinance sector?• N ˚ 2: How can the private sector help provide access to drinking water

in developing countries?• N ˚ 1: SME financing in Sub-Saharan Africa

FILMsFilms about projects financed by PROPARCO (5 minutes long)

• Teatime in Gachege, Kenya• Sustainable cogeneration in Kenya• Financing private equity investment in Morocco• Financing microfinance in Morocco• South Africa: Supporting “Black Economic Empowerment” • Development and the private sector

websIteVisit our website: www.proparco.fr

Highlights2010151, rue Saint-Honoré - 75001 Paris

Tel.: +33 1 53 44 31 08 - Fax: +33 1 53 44 38 38www.proparco.fr

All our publications and films can be downloaded at www.proparco.fr, under Publications

2010 Highlights - PROPARCO

Documents

Transcript of 2010 Highlights - PROPARCO