ICD Marketing Presentation October 2005 Ramadan 1426 Presentation

ICD Marketing Presentation October 2005 Ramadan 1426

Presentation Outline General Background Portfolio Review Investment Guidelines Working with ICD Performance 2

Mission & Proposed Vision q Vision The Islamic Corporation for the Development of the Private Sector (ICD) strives to be a major player in the development and promotion of the private sector in OIC member countries. q Mission To complement the role played by the IDB in promoting social and economic growth and prosperity through: § Providing Islamic financial services & products. § Promoting competition and entrepreneurship in member § § countries. Encouraging cross border investments. Advising governments & businesses. 3

ICD’s Capital Structure q Type: multilateral financial institution. q Authorized capital: US$ 1 billion. q Capital available for subscription: US$ 500 million. q Headquarters: Jeddah, Kingdom of Saudi Arabia. Capital structure Public Financial Institutions 20% IDB 50% Member Countries 30% 4

Shareholders of ICD Countries 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Algeria Azerbaijan Bahrain Bangladesh Benin Brunei Darussalam Burkina Faso Cameroon Djibouti Egypt Gambia Guinea Bissau Indonesia Iran Iraq Jordan Kazakhstan Kyrgyzstan Kuwait Lebanon Libya 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. Malaysia Maldives Mali Mauritania Mozambique Niger Pakistan Palestine Qatar Saudi Arabia Senegal Sierra Leone Sudan Suriname Syria Tajikistan Tunisia Turkmenistan Uganda UAE Uzbekistan Yemen ISLAMIC DEVELOPMENT BANK Public Institutions Iran Foreign Investment Co. Bank Kesharvazi (Iran) Bank Melli (Iran) Saudi Public Investment Fund (Saudi Arabia) Banque Nationale D’Algerie Shareholders as of 06/2005 5

Objectives q Provide a wide range of financial products and services to Private Sector projects of high potential and contribution to growth in Islamic countries. q Mobilize additional resources for the private sector development. q Encourage the development of Islamic financing and capital markets. 6

Products & Services q Direct Financing q Structured Finance q Advisory Services q Asset Management 7

Presentation Outline General Background Portfolio Review Investment Guidelines Working with ICD Performance 8

Accumulated approvals in USD m 9

Accumulated number of projects approved sinception 10

Accumulated disbursement in USD m 11

ICD operations are diversified Marketing Operations Targets 12

Portfolio by sector 13

Portfolio by country 14

Portfolio by mode of financing 15

Presentation Outline General Background Portfolio Review Investment Guidelines Working with ICD Performance 16

Areas of Focus q Modern Manufacturing q ICT and Power q Health & Education q Financial Sector q SME’s Development q Advisory Services 17

Investment Guidelines (1) q Company Eligibility: § Promising private sector projects introduced by experienced entrepreneurs or promoters. § Public sector enterprises under privatization. q. Eligible enterprises should have: § majority voting stock in the hands of private investors, § from member countries. an appreciable contribution to the local economy or intraregional trade. 18

Investment Guidelines (2) q Term financing: § For “Greenfield” projects: 40% of project investment cost § For expansion of existing projects: 50% of project investment § § cost. Tenure: up to 7 -8 years including Grace/Gestation period. Minimum project size: US$ 5 m. (Except for projects financed from lines). q Equity Investments: § Maximum participation: 33% of investee’s capital. § Clear exit strategy within 3 -5 Years. § Equity projects should not have more than 30% interest bearing debt. 19

Investment Guidelines (3) q Security & Guarantees: Various types of security or guarantees are accepted by ICD: § § § Mortgages/pledges. Assignment of receivables. Corporate guarantees from parent companies. Personal guarantees Bank guarantees. 20

Presentation Outline General Background Portfolio Review Investment Guidelines Working with ICD Performance 21

Working with ICD (1) q Sponsor will have to send a feasibility study emanating from a recognized source of expertise, including: § A short project description (new or expansion, project concept, § § § country, implementation time frame, etc); Summary of project cost and financing plan (debt/equity); Amount and purpose of the financing requested from ICD; The project’s market potential; Ownership and organizational structure; Proposed collateral or guarantees. ICD usually conveys an initial reaction after about 2 weeks. 22

Working with ICD (2) q Once all necessary information is received, the due diligence exercise would start and would typically entail site visits, involvement of consultants and desk work. q Once finalized, the project appraisal is submitted to the Board of Directors of ICD. q Time needed for due diligence depends on several factors. A period of between 4 – 6 months is standard. q Normally, one-third of projects approved for due diligence would reach ICD Board of Directors. 23

Contacts Islamic Corporation for the Development of the Private Sector (ICD) P. O. Box Telephone Fax E-mail Website : : : 54069, Jeddah 215514, Saudi Arabia (966 -2) 644 1644 (966 -2) 644 4427 icd@isdb. org http//www. icd-idb. org 24

Presentation Outline General Background Portfolio Review Investment Guidelines Working with ICD Performance 25

ICD 1425 H Annual Report Highlights q Clean Audit Report. q Clean Sharia’a Report. q Gross Revenues Increase by 44% as compared to LY. q Core Investment Portfolio Revenues increased by 94% as compared to LY. q Liquid Investment Portfolio Revenues decreased by 42% as compared to LY. q Expenses increased by 18% as compared to LY. q Net Profit Increase by 167% as compared to LY. q Members’ Equity Increase by 11% as compared to LY. 26

3 Years Balance Sheet (USD Millions) Total Core Investment Portfolio Total Liquid Assets Portfolio Total Other Assets TOTAL ASSETS Total Members’ Equity 1423 1424 1425 4. 11 4 5. 74 6 0. 98 3. 51 22 4. 28 20 1. 46 9. 79 4. 96 1 1. 87 7. 41 27 4. 98 28 4. 31 4. 59 27 1. 88 28 1. 86 27

3 Years Income Statement (USD Millions) 1423 1424 1425 Core Investment Portfolio 4. 68 8. 74 16. 97 Liquid Assets Portfolio 3. 42 4. 89 2. 82 Services Revenue 0. 76 0. 47 0. 58 Total Revenue 8. 86 14. 10 20. 37 Expenses 7. 92 11. 61 13. 71 Net Income 0. 93 2. 50 6. 67 28

Ratios - Financials Profitability Ratios (USD Millions) Revenue per staff member (000’s) 1423 1424 1425 285. 72 381. 11 433. 49 Net Income to Revenue 10. 55% 17. 70% 32. 72% Core Revenue to Investment 10. 60% 13. 29% 10. 54% 29

Performance Comparison Between ICD & Similar Institutions ICD 1425 IIC 2003 AFIC 2002 Total Revenue 20. 37 21. 95 6. 28 Expenses 13. 71 19. 78 4. 26 Net Income 6. 67 2. 17 1. 85 Total Assets 314. 31 426. 2 N/A IIC: Inter-American Investment Corporation AFIC: Asian Finance & Investment Corporation 30

Thank you 31

Back-up Slides

Modes of Financing q Leasing (Ijara) • ICD buys capital goods and gives the beneficiary usufruct rights for a period of time against payment of fixed periodical rentals. Repayment can start after a grace period. Ownership is transferred at the end of the rental period. q Installment Sale • ICD buys capital goods and resells them to the beneficiary at a price agreed by the two parties. The repayment is made through consecutive installments. A grace period can be accorded. q Sale Contract (Istisna’a & Parallel) • Istisna’a is a contract whereby ICD agrees to manufacture/acquire an asset, based on a specific order received from a client, and then, once manufactured, sells the said asset (through installments), to that client for an agreed price. 33

Modes of Financing q Equity • This is the purest form of Islamic financing where ICD would share the project’s risks and benefits. q Quasi – Equity • ICD can provide for a term financing facility that could be converted (at certain conditions) into equity, at some stage of the project life. 34

Net Accumulated approvals in USD m Net of cancelled Projects 35