International Finance Corporation2121 Pennsylvania Avenue, N.W.Washington, D.C. 20433

USA1-202-473-3800www.ifc.org

IFC: A knowledgeable partnerin the emerging markets

For further information, please contact:Reyaz Ahmad 1-202-473-7785 rahmad@ifc.org

IFC’s mission is to promote sustainableprivate sector investment in developingcountries, helping reduce povertyand improve people’s lives.

� Can IFC be the lead lender?IFC typically takes the lead in organizing financ-ing for its projects. However, IFC almost neverholds the majority exposure in a project orcompany. Whenever possible and practical, IFCwill leverage its own investment through loanparticipations to one or more internationalcommercial banks.

� Does IFC invest in all emerging markets?IFC invests in private projects and companies inemerging market member countries that areclassified by the World Bank as having low ormiddle income. The 181 member countriesinclude all the major investment destinations.

� Does IFC guarantee protection frompolitical risk?No. However, IFC’s participation in a projectmitigates political risks, which benefit allstakeholders in the project. Co-investment withIFC involves a long-term partnership for aninvestment or a series of investments in emerg-ing markets. In case of difficulty, IFC worksclosely with partners in an affected project toaddress issues with the relevant government orprivate entities.

� Can IFC mobilize other financing sources?Yes. IFC can offer loan participations servicesthrough partnering with banks or other finan-cial institutions.

� What other benefits does IFC investmentprovide?An IFC investment is often seen as a stamp ofapproval, given IFC’s status and the care it takesin evaluating its investments. IFC provides sup-port on corporate governance and onenvironmental and social sustainability, whererelevant.

FinancingInfrastructureMachineryWorldwide

Frequently asked questions:

� Are there any limits to IFC’s financialsupport?Typically, in loans and equity, IFC willfinance up to 35 percent of a new projectand 50 percent of an expansion project,with an upper limit of 25 percent of thecapital employed.

� When is IFC willing to contribute equity?IFC will provide equity when the financialstructure will benefit from IFC’s participa-tion, when the owners express an interestin IFC’s participation, and when IFC sees astrong potential for profit and develop-ment impact.

� Is IFC a long-term equity partner?IFC will remain in a project as long as itspresence is needed for financial and riskmitigation reasons. IFC will require an exitmechanism, which could be a privateplacement, put option, or placement onthe market.

� Does IFC provide long-term loans?Yes. IFC provides loan terms that enhancethe project’s sustainability. Grace periodsand tenors are matched to the project’sability to repay.

IFC is the largest multilateral source ofloans and equity finance for privateenterprises in emerging markets.

� IFC, a member of the World Bank Group, special-izes in investment in private companies andprojects in emerging markets, including China,India, and Russia.

� IFC’s shareholders are 181 developed and devel-oping countries represented on IFC’s Board ofDirectors by their governments.

� At the end of fiscal year 2008, IFC had a networth of $18.3 billion and a total committedportfolio of $39.8 billion. The committed portfo-lio include investments in 1,490 companies in 122countries.

� IFC is unique among international financial insti-tutions, with a global focus and strong localpresence. IFC staff are based in 100 cities in 81countries.

� IFC invests in sustainable private enterprisesthat benefit the economy, promote a soundenvironment and social well-being, and areexamples of good business for otherentrepreneurs.

IFC’s wide range of financial products and services:

� IFC provides long-term debt, quasi-equity, andequity financing for private sector investments onmarket terms, in the form of project or corporatefinance.

� In some countries where only short- to medium-term financing is available, IFC can provide long-term funds (8-12 years), sometimes in local currency.

� IFC has extensive local knowledge and contactsthrough offices in some 80 emerging markets.

� IFC can also mobilize additional funding frominternational commercial banks, which wouldotherwise not be willing to invest (or would investfor the short term only) because of country riskfactors. Such mobilization is due to the reductionin political risk that typically results from coinvestingwith IFC. As a member of the World Bank Group,IFC has preferred creditor status in the countries inwhich it invests, the benefits of which extend tothe projects it supports.

� IFC also participates in corporate restructuringprojects by assisting viable companies in realigningtheir operational cash flows with their financialobligations through financial restructuringmeasures.

The worldwide machinery and machinetool industry:

� Is highly specialized—many suppliers of machineryhave years of experience in an industry.

� Is rapidly evolving, putting an emphasis on softwareskills, short runs, rapid product changes, and bettermonitoring of equipment and product quality.

� Has long been concentrated in industrialized coun-tries, because of the experience and technologyrequired.

� Today, however, there is a strong trend to moveproduction to the emerging markets.Advantages include lower costs; better serviceto manufacturers, many of whom are nowlocated in developing countries; and access tolocal engineers and other skilled labor, particu-larly in China and India, whose know-how canbe tapped to customize equipment.

Some data on the sector:

� Globally these are large markets. In 2004 themarket for machine tools was $50 billion; forplastic forming machinery, $19 billion; for foodprocessing equipment, $21 billion; and forpackaging machinery, $25 billion.

� Leading countries for manufacture of

machine tools

Ranking by Country Market size Local production Growth of localmarket size US$ billion US$ billion production

1 China 10.9 5.0 34%

2 Japan 7.5 13.3 10%

3 USA 5.8 3.1 -15%

4 Germany 5.3 9.5 3%

11 Brazil 1.1 0.7 25%

12 India 1.0 0.3 50%

17 Russia 0.4 0.2 0%

IFC can help, with expertise as well as financing:

� In many developing countries, the governmenthas been heavily involved in the sector throughownership or control of major local compa-nies—many of which are now being privatized.IFC has global experience in helping local andforeign investors navigate a complex andchanging business environment. As a publicentity working in the private sector, IFC is anideal partner to investors in these circumstances.

� As the industry moves into the emergingmarkets, there are many opportunitiesfor alliances between companies in indus-trial and developing countries. IFC has anunrivaled presence in most developingcountries and the financial and technicalexpertise to assist in this process.

IFC’s investment in the machinery/machinetool sector:

� Crompton Greaves, one of India’s largestcompanies in electrical equipment. IFCprovided a loan to support a capitalrestructuring and modernization of itsfacilities, allowing it to benefit from theincreased infrastructure spending inIndia, and to develop its export markets.

� Larsen & Toubro, a diversified engineer-ing and manufacturing company in India,whose products include electronic andelectrical equipment. IFC provided a loanthat allowed a restructuring of the groupand a modernization program, helpingmake L&T more competitive and assistingits push into export markets.

� Launch Tech, China’s largest manufacturerof diagnostic equipment, lifts, and wheelservicing equipment. IFC provided a loanand equity investment to develop thecompany’s range of equipment for theautomotive servicing market, which willhelp it rapidly expand in China andincrease its sales in export markets.

� Electrotherm, The company produceselectric two-wheeler scooters for con-sumers in India looking for a clean, inex-pensive and reliable means of transport.The scooters are sold at the affordableprice of $600 to $1,000. IFC’s $25 millioninvestment is helping the companyexpand its production and enhance itscompetitiveness and energy efficiency.