Global Information and Communication Technologies Department

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IFC - ICT East Africa Study Solomon Asamoah,
Principal Investment Officer International
Finance Corporation Nairobi, 06 July 2004
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International Finance Corporation

• Private sector arm of the World Bank
• 176 member countries 66 international offices
• Established in 1956 to promote private sector
  development
• Largest multilateral private sector investor in
  developing world
• Investing US4B per year worldwide and
  US250-350M in Sub Saharan Africa
• US6.8 billion in total capital AAA rated
• Portfolio commitments of US16.8 billion at
  6/30/03 US6.6 billion in loan syndications
• Established track record in communications IT
• Between 1992-2003,
• 105 WB Loans totaling US6.5billion in 73
  countries
• 124 IFC Investments totaling US2.3 billion in 45
  countries
• 420 infoDev Grants totaling US65 million in 84
  countries
• Investing up to US400 million annually 125
  investments in 45 countries
• IT division investing US50 million annually
  focused on selected regions

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GICT within the World Bank Group

• The World Bank Group has provided over US16.5
  billion for information and communication
  technologies projects in the public and private
  sectors
• The Global ICT Department brings together IFCs
  experience in private sector investment
  transactions and the World Banks expertise in
  policy and regulatory matters, promoting access
  to information and communication technologies in
  developing countries

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GICT US5.9 Billion Commitments (Including
Syndications)
Central Eastern Europe US659 Million
Southern Europe Central Asia US714 Million
East Asia Pacific US669 Million
Middle East North Africa US644 Million
Latin America Caribbean US1,936 Million
Sub-Saharan Africa US357 Million
South Asia US422 Million
World US474 Million
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GICT Divisions IFC Activities
World Bank Units
Policy Division
InfoDev
Credit Portfolio Division
Information Technology Investment Division
Global Communications Investment Division
a grant-based facility for innovative
applications of ICTs with a social impact
Provides policy and regulatory advisory services
to governments in the telecom, postal,
broadcasting, and e-governance sectors
Manages the ICT portfolio of IFC and provides a
credit review function
Provides equity and quasi-equity financing to
technology companies
Provides long-term debt and equity financing to
the telecom infrastructure, broadband
connectivity, broadcast media and satellite
sectors
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IFCs Role in Emerging Markets

• Provide long-term financing where otherwise not
  available
• IFC presence reassures
• Foreign investors
• Local partners
• Local and international lenders
• Governments
• Honest broker / neutral partner
• Measure of political risk cover
• Focus on emerging and transition economies means
  that we do not abandon these markets during
  difficult times
• Value added in areas such as Environmental and
  Social Issues, Corporate Governance

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IFC Role in Technology Investing

• IFC has both a fiduciary and development mandate
• Must do well to do good
• Invests on market terms complementing existing
  capital markets
• Mobilizing funds in developing markets
• Ability to invest in segmented, illiquid capital
  markets
• Offer credit enhancements credit guarantees on
  syndicated loans
• Political risk coverage honest broker / neutral
  third party
• IFC investment focus
• Investing in IT companies with global potential
  and introducing them to global capital markets
• Providing follow-on financing and mobilizing
  funding where capital markets are thin
• Identifying and promoting emerging IT sectors
  opportunities within the markets IFC serves
• Selectively investing in early stage IT companies
  that might not otherwise attract funding
• Encouraging proliferation of IT as a foundation
  for growth in emerging markets

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IFC Investment Criteria

• Private sector management and ownership
• Sound project fundamentals
• Strong, credible sponsorship with experienced
  management teams
• Demonstrable development impact
• Positive economic return
• Social environmental impacts mitigated
• Demonstration effect
• No government guarantees

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IFC Investment Criteria (Contd)

• IFC can finance up to
• 25 of project cost - start-up projects
• 50 of project cost - existing businesses
• Typical deal size
• US2-100 million from IFCs own funds
• Matching or larger syndicated financing

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What type of financing does IFC provide ?

• A Loans senior debt for IFCs account, usually
  foreign currency
• B Loans senior debt for the account of
  Participant banks. This is IFCs loan
  syndication product. Always foreign currency.
• C Loans subordinated debt or other mezzanine
  type financing for IFCs account. May be
  convertible or have other quasi-equity features
• Equity preferred or common shares
• Partial Credit Guarantees partial guarantee of
  bond issues (usually local currency) or local
  currency bank loans
• Other local currency loans in selected
  currencies, hedging and structured products
  (i.e., securitizations)

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Purpose of the IFC ICT East Africa Study

• To better understand the issues facing the sector
  in the region
• To devise solutions and recommendations to the
  authorities regarding the removal of impediments
  for the growth of the sector
• To seek investment opportunities for IFC within
  the sector
• To seek other non-investment areas for greater
  IFC intervention

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• THANK YOU
• Contact Info
• Solomon Asamoah
• Principal Investment Officer
• International Finance Corporation

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Portfolio Investments(IT Services)
ru-Net http//www.ru-net.ru ru-Net is an IT
holding company, which operates a network of
leading IT firms in Russia, including Yandex, the
countrys leading portal Tops, a systems
integrator and Ozon, Russias leading online
retailer. Ru-Net has raised over US20 million
to date from IFC, Barings Vostok, United
Financial Group and Rex Capital.
IBS http//www.ibs.ru Information Business
Systems Group is the largest IT company in
Russia. IBS offers a broad range of services,
including application development, software
design, IT consulting, systems integration,
implementation, support and maintenance for
clients such as Boeing, Dell, Deutsche Bank, IBM
and Microsoft. Through its Dealine subsidiary,
IBS is the leading producer and distributor of
computer hardware in Russia. It has an RD lab
that develops world-class IP in agent-based
systems, self-configuring ad-hoc wireless sensor
networks and advanced algorithm research. IBS
has raised more than US30 million to date from
IFC, AIG Brunswick and Citigroup.
Qualita http//www.grupoqualita.com Qualita
offers information technology services and
solutions to large and medium-size private
companies and government agencies in Mexico. It
was founded in 1983 and currently has 820
employees. The company is based in Mexico City
and has three divisions, which offer systems
integration, services such as technical support
and training, and solutions such as software
development and IT consulting.
Great Infotech http//www.git.com.cn Great
Infotech Group is an IT services firm focused on
the financial services industry in Mainland
China. GIT offers its clients a full range of
services including systems integration and custom
software development. The company has evolved
from its roots as a hardware distributor into a
systems integrator for domestic banks and
insurance companies. The company has 260
employees. Investors in GIT include IFC, DEG,
OCBC, WBL and Walden International.
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Portfolio Investments(IT Enabled Services)
DQ Entertainment http//www.dataquestinfoway.com D
Q Entertainment is Indias leading contract 2D
and 3D animation company specializing in TV
series, full length movies and games. Based in
Hyderabad with over 1000 employees, DQ has
co-production efforts with TV and motion picture
studios in Europe and North America, including
Disney. DQ has raised over US5 million from
IFC, TDA Capital and ILFS.
Glass Egg http//www.glassegg.com Glass Egg
Digital Media Vietnam is an off-shore software
development company focusing on computer and
video games development, contract programming
and 3D animation. Based in Ho Chi Minh City,
Glass Egg has completed outsourced animation work
with Mattel Media, Le Mans, Electronic Arts and
Kuju Entertainment. IFC is a lead initial
investor in Glass Egg.
Spryance http//www.spryance.com Spryance is a
health care BPO offering transcription services
for the medical information services industry.
Located in India, Spryance has built proprietary
transcription, data capture and workflow software
to efficiently process medical information. IFC
led the Series B round of financing.
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Portfolio Investments(IT Enabled Services -
continued)
Software Venture International Corporation
(SVI) www.svi.com.ph With over 2500 employees
and revenues exceeding US40 million, SVI is the
leading IT services firm in the Philippines.
Founded in 1986, SVI offers call center, business
and software services to global customers.
Investors in SVI include GE Capital, Citigroup,
Walden, JAFCO and IFC.
Novica www.novica.com Novica is an online
retailer of high quality items produced by
artisans from around the world. Founded in
association with National Geographic, Novica
offers a global, efficient means for local
artists who might not otherwise be able to market
their products. IFC and National Geographic are
investors in the company.
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Portfolio Investments(Software Hardware
Products)
Egar Technology http//www.egartech.com/ Egar
Technology offers a comprehensive suite of
trading and risk management software for the
financial industry. Egar has sold its solutions
for more than 40 customers, including ABN Amro,
Alfa Bank, Bear Wagner, CIBC, Credit Agricole,
Societe Generale, RiskMetrics and SberBank.
Founded in March 2004, Egar employs 140
developers and financial specialists in Moscow
and the United States. IFC co-led a first round
investment in Egar with Delta Capital.
NewPath Ventures New Path was founded to create
companies with a hybrid Indo-U.S. structure, thus
utilizing the cost effective development and back
end implementation strengths within India and the
product definition and marketing strengths within
the U.S. The two founders have extensive and
successful entrepreneurial and operational
experience. New Path will create 4 to 6 companies
over 2 years, investing 5 million - 7 million
in each, and actively manage each company through
prototype completion. Focus areas will include
software systems and semiconductors. IFC
participated as a first-round investor with New
Enterprise Associates and ChrysCapital.
Mexmal www.mexmal.com Grupo Mexmal is a leading
distributor of IT products and value-added
services in Mexico. Mexmal specializes in the
distribution of its own line of products and
peripheral devices under the brand name Alaska.
IFC is a lead initial investor in the company.