Transcript IFC Presentation - Convention on Biological Diversity

International Finance Corporation
Conservation Finance
Activities
Sustainable Conservation Finance Retreat
Harbourtowne, Maryland
February 2002
IFC Overview

Private Sector Arm of World Bank Group

Investment bank that provides equity, debt & advisory services
(e.g., development of concessions)
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In FY 2001, IFC approved US$ 3.7 billion of investments in 240
projects
As GEF Executing Agency, IFC has a $129M portfolio (12
projects) and $20M p.a. pipeline

Highly innovative projects that have pioneered the use of non-grant
financing (e.g., loans, guarantees, contingent finance, equity)
IFC’s Approach
to Conservation Finance

IFC approaches conservation finance from a private sector
angle.

IFC’s projects aim to generate sustainable conservation
financing by catalyzing viable businesses.
IFC searches for instances where there is a business case to
support biodiversity conservation.
IFC seeks innovative business models.
IFC seeks to finance projects on a commercial basis; IFC
tries to minimize concessional funds.
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IFC’s Approach
to Conservation Finance

IFC develops projects that provide long-term
conservation finance via:

Concession Fees (e.g., river concessions, tourism
concessions in parks)
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Ecotourism Fees
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Business Profits
IFC’s Biodiversity Investments
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Terra Capital Fund
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$15 M private equity fund for LAC ($4 M IFC + $5 M GEF)
Small and Medium Scale Enterprise Program
Provides loans of up to $1M to financial intermediaries (e.g., CI, TNC)
who on-lend for shade-grown coffee, ecotourism, organic agriculture, etc.
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Conservera Amazónica (Peru)
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$4 M FSC-certified hearts-of-palm project in the Amazon Rainforest
Ecotourism Investments
Equity investments and loans for lodges in or near conservation areas
(e.g., Boundary Hill, Inka Terra, A&K); in some cases GEF grants are used
to catalyze incremental biodiversity-benefiting activities

Terra Capital Fund
Equity Investments to Date

Certified Pure Ingredients
Organic berry farming (Chile)

Muaná Alimentos
FSC-certified hearts-of-palm company; located in the Amazon river
estuary (Island of Marajo, Brazil)
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Tobasa Bioindustrial
Harvesting and processing of babassu coconut in the Amazon
(Tocantins State, Brazil)
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CIAPAR
Organic vegetables farming (Sao Paulo, Brazil)
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Frezzi
Organic grapes in Argentina
Example SME Investment:
Symbio

Polish company that assists small-scale farmers in buffer
zones to convert to organic agriculture
Symbio buys the products and sells them into EU wholesale market,
making a margin on the sale

Symbio’s principle barrier to growth is the inability to
acquire working capital (WC)
Banks won’t provide a credit line due to high perceived risks, lack of
familiarity with organic sector, and weak balance sheet

3-4 year guarantee is being offered to Polish bank so that it
extends WC credit line to Symbio
Guarantee will be scaled down each year as Symbio strengthens its
balance sheet and meets financial performance indicators
IFC/GEF Biodiversity Pipeline

Komodo National Park Concession
Concession awarded to JV (which involves TNC and will receive no financial
returns). GEF grant will help cover management costs during initial years; it
will be scaled down and eliminated after 7 years as park revenues increase.
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EcoEnterprises Fund
TNC-managed investment fund and technical assistance facility for small-scale
ventures in Latin America with strong links to local NGOs

Kijani Initiative
Investment Fund and Business Development Facility for biodiversity projects in
Africa

European Conservation Farming Initiative
Investment fund and Tech. Assistance Facility to catalyze shift to
conservation farming in Central and Eastern Europe
Asian Conservation Corporation
& Foundation

The Asian Conservation Foundation (ACF) will fund
conservation activities run by local NGOs in priority areas in
the Philippines
GEF and other grant funding will be used for 5-7 years
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The Asian Conservation Corporation (ACC) is a holding
company that takes majority (or significant minority) equity
stakes in for-profit ventures that can provide biodiversity
benefits in priority areas
The ACC will pass board resolutions or include clauses in its
share purchase agreements that obligate investee companies
to fund the ACF after its grant funding runs out.
Fly-Fishing Concessions
in Mongolia and Kamchatka
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Eg-Uur Watershed (Mongolia)
Mongolia-American JV will receive concession to operate fly fishing
trips on pristine river; GEF funds will catalyze conservation activities
for surrounding watershed; conservation activities will be sustained by
ongoing concession fees.
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Kamchatka Wild Salmon Center Project (Russia)
Innovative financial mechanism (e.g., dedicated credit line or guarantee
facility) to get domestic and foreign outfitters to jointly develop
sustainable sport fishing operations on watersheds throughout the
Kamchatka Peninsula. Project will develop concessions and a
certification system for environmentally-friendly sport fishing
operations.
Poison Dart Frog Ranching
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IFC is catalyzing a new Peruvian
venture that will save rainforest &
alleviate poverty via sustainable
production of poison dart frogs
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By overcoming the limiting factor (i.e.,
# of suitable breeding sites) the project
can produce a surplus population for
export to U.S. and Europe.
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Profits will fund park rangers &
community projects
IFC’s Staff
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IFC has only several individuals who focus on
conservation finance, but we can leverage:
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Many in-house economists, engineers, lawyers,
environmental & social specialists, and investment officers
(IFC is the highest concentration of MBAs in Washington!);
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Biodiversity expertise of the World Bank & IUCN (Deborah
Vorhies is based at IUCN headquarters);and
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Top consultants for project development purposes.
IFC’s Expertise
regarding Conservation Finance
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Business Appraisal:
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Concession Design:
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Tremendous in-house capabilities regarding financial,
technical, environmental, social, legal, and economic
analysis.
Extensive investment experience in many sectors &
countries
IFC can leverage its experience with water, electricity, &
tourism concessions
Investment Structuring:
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IFC can structure equity, quasi-equity, debt, guarantees,
etc. for for-profit ventures in developing countries.
IFC’s Needs & Potential Role
in Conservation Finance Alliance
 IFC’s
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IFC is looking for viable business opportunities
that will benefit biodiversity conservation.
 IFC’s
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Needs:
Potential Contributions:
For viable projects, IFC could provide significant
financial engineering expertise as well as
commercial and/or concessional financing