CIFI

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	26031
Company name	Inter-American Infrastructure Finance Corporation
Country	Latin America Region
Sector	Finance & Insurance
Environmental category	FI
Department	Infrastructure
Status	Pending Signing

Date SPI disclosed	December 28, 2007
Projected board date	January 31, 2008
Previous Events	Approved: May 15, 2008

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Corporación Interamericana para el Financiamiento de Infraestructura, Sociedad Anónima (CIFI or the company) was established in 2001 as a non-banking financial institution with the objective of primarily providing financing to small and medium infrastructure projects across Latin America and the Caribbean (LAC), a segment that has traditionally been overlooked by large financial institutions. The project consists in the implementation of CIFI’s business plan, including its expected asset growth and operational consolidation, as well as its potential access to long term funding through the international capital markets.

Anticipated development impact of the project

IFC's support to CIFI through the provision of longer term funding and an equity investment will generate high development impact by:

- Reducing the infrastructure investment gap in Latin America:

Infrastructure investment has high development impact through facilitating economic development. CIFI targets an under-served niche and its operations will be incremental to those being carried out by other regional players.

- Increasing access to basic services:

CIFI's portfolio covers a wide range of projects including water supply, transportation, power and social infrastructure. Going forward, CIFI is expected to support infrastructure projects that similarly convey high developmental impact for local populations.

- Demonstration Effect:

Given the high developmental impact of infrastructure investment, IFC intends to foster similar business models in other emerging market regions going forward. CIFI could provide a benchmark for similar models in other regions of the world.

- Increasing employment:

Infrastructure investment facilitates local economic activities, hence fostering the creation of related jobs and services; e.g. jobs and services for construction by equipment and construction material suppliers; and jobs created by other businesses linked to and/or located near the project sites.

- Higher fiscal transfers to regional governments:

The infrastructure projects supported by CIFI are expected to be economically viable / sustainable and result in net positive tax payments to local and national governments.

IFC's expected development contribution

Through the provision of financing to CIFI, IFC will establish a partnership with an important player in infrastructure financing in Latin America that can provide incremental long-term financing required for infrastructure projects in the region. IFC is expected to contribute to the implementation of CIFI’s business plan through the transfer of industry knowledge, structuring skills and best international practices. CIFI would benefit from IFC’s exposure to international industry practice and innovative financing solutions across emerging market regions.

IFC’s investment and its mobilization efforts through its global participant bank network will also introduce CIFI to new term lending institutions, which will likely continue their business relationship with CIFI in the future. In this regard, IFC will provide the company support through direct financing and mobilization efforts, which are key steps towards the company’s stated goal of achieving an international rating and the flexibility to raise lower cost long term funding from the capital markets. In this context, through the proposed investment in the company, IFC would also provide comfort to other potential institutional investors in the company.

Environmental and social issues - Category FI

This is a Category FI project according to IFC's Environmental and Social Review Procedure. CIFI has an existing Social and Environmental Management System (SEMS), which IFC analyzed at appraisal, along with CIFI's plans for future activities. CIFI's SEMS is generally comprehensive and satisfactory, with a few areas needing revision to comply with IFC requirements. CIFI will be required to revise its SEMS to IFC's satisfaction prior to disbursement; implement the revised SEMS to ensure that investments supported by IFC financing comply with applicable IFC Performance Standards, national social and environmental standards, and IFC's FI Exclusion List; and submit Annual Environmental Performance Reports to IFC in a form agreed with IFC.

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