Beirut - May 13th, 2009Financing ForumPROPARCO (AFD GROUP)Elodie PARENTSanabel 6th Annual Conference

General overview of PROPARCOCreated in 1977 and dedicated to the financing of private initiatives in emerging and developing countries:Shareholding split amongst AFD (59%) and selected private business partners ;Role of promotion of investments and market structuration through grant of loans, guarantees and equity investments;

Focus on selected economic development issues :Infrastructure, Banking and financial services, Participating in investment funds, Promotion of natural ressources & Microfinance

Key figures 2008Key figures 2008 a year of growth Loans: Commitments:M 683,5 Outstanding loans:M 1029,8 Equity : Transaction approvals:M99,1 (17 transactions). Gross value of equity portfolio:M 215,7Guarantees : Transaction approvals: M6,8 Committed guarantees: M55,8

Capital: M 420Balance sheet: 1,6billionNet income:M 20,8

Proparcos Microfinance strategy Objective: support MFIs operating in areas where market risk-profitability ratios do not allow them to finance their growth using private ressources

Financial tools:- Equity and Quasi-Equity: Less than 20% of the capital of the institution, a minimum ticket of 1 MEUR, exit policy at 7-8 years- Loans: 3 to 15-year maturity, minimum 5 MUSD, denominated in EUR, USD or local currencies, at market conditions, senior and/or subordinated loanGuarantees: all types and tenors, commercial loans or bond issues, local or hard currencies

Operating criteria: - Greenfield or brownfield projects, - Any legal structures (Bank of microfinance, NGO, company), - Financial structure => next slide

Key criterias

Size : minimum equity of 5 MUSD and total assets of 50 MUSD

Profitability: positive net profit for 3 years minimum, minimum ROE of 10% and ROA of 1.5%,

Loan portfolio/total assets > 70%

Quality of portfolio (Portfolio at Risk

Key criterias Contd Governance Anti-Money Laundering and against the Financing of Terrorism procedures (AML/FT) Environmental Responsibility (ESR) Transparency

Social performances as guidelines for both (i) internal management of the MFI and (ii) operational activities

Rate policy as linked to the financial performances : Could the financial performances justify the interest rate ?

=> Main shareholders and shareholding pattern and managers

AL AMANA Quasi-equity investment

Al Amana is an NGO => not possible to invest in equity

Equity enhancement of 9 MEUR to match the ratio : Equity like/Total assets = 15 % (financial covenant) Tenor : 8 years & grace period: 5 years

Context : subordinated loan to MFI are not regulated => what ensure recognition of subordination by other investors ?

Structuration of the subordination aligned on local banking regulation (no prepayment can be asked by Proparco in any case,)

Issue of local currency => guarantee to a local bank which provides the local subordinated funding

=> High level of commitment of Proparco => hence need for the key criterias to be fulfilled

Key contacts

Thank you for your attention