AUA - Antigua

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	27533
Company name	American University of Antigua Limited
Country	Antigua and Barbuda
Sector	Education Services
Environmental category	C
Department	Health and Education
Status	Pending Disbursement

Date SPI disclosed	May 29, 2009
Projected board date	June 28, 2009
Previous Events	Signed: September 25, 2009 Approved: July 2, 2009

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

American University of Antigua (“AUA” or the “University”) was founded in 2004 in Antigua and Barbuda as a for profit higher education institution which prepares students to practice medicine in the United States. Owned by the Manipal Group (“Manipal”), a global leader in education with operations in Asia, the Middle East, and the Caribbean, AUA currently enrolls over 1,400 students. The proposed project consists of providing long-term financing to support the origination of new loans for AUA students over the next three years (the “Project”). Prior to the global financial crisis, AUA students had been able to directly obtain long-term financing from U.S. private commercial banks.

Anticipated development impact of the project

Diversification of Antiguan Economy – Continued attraction of offshore medical students to Antigua is expected to have positive impact on the local economy by supporting in a sustainable fashion: (i) increased tax collections; (ii) development of the island nation’s tourism and other service related industries (property management, catering, construction, etc.); and (iii) employment of local support staff. While Antigua and Barbuda’s small population of 80,000 enjoys a reasonable standard of living, the island nation is susceptible to external factors (lower remittances, reduced tourism revenues, natural disasters) and remains one of the most indebted (as % of GDP) nations in the region.

Support for global medical education – Manipal’s global approach to education provides flexibility in the deployment of medical workers and use of educational infrastructure. AUA’s program fulfills a specific U.S. market requirement, while also potentially reducing the relocation of non-U.S. nationals who might otherwise leave markets also experiencing medical shortages.

Medical and Research Benefits – AUA’s affiliation with the Mount St. John’s teaching hospital in Antigua provides financial and potentially medical support to a medical facility that supports local patient care. In addition, AUA has established, in collaboration with the Antiguan government, the Center for Tropical Diseases, an institution that conducts research on infectious diseases particular to Latin America and the Caribbean, Asia, and Africa. Both types of collaboration support improvement of the health and living condition of the local population.

IFC's expected development contribution

OECS countries in the region have typically relied on commodities and service industries such as U.S.-linked tourism, while remaining susceptible to external shocks. The project supports a broader development agenda for Antigua (through local employment, student training, student spending) and may address some of the issues being faced in the health arena (e.g. research, presence of specialists). Furthermore, the Project promotes south-south investment, which permits countries such as Antigua to establish new business relations and attract financing sources from extra-regional partners.

For Indian investors such as Manipal, the international expansion provides access to new mature and emerging markets, while providing diversification benefits, as well as a larger platform across which to gain efficiencies of scale. As the Group expands internationally and consolidates its position in a number of emerging markets, such diversification will become increasingly important. Finally, IFC’s combined experience in both the health and education sectors uniquely position IFC to support Manipal’s growth in its two core areas of competency.

Environmental and social issues - Category C

This project is engaged in financing student loans, and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. The project will be required to demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions. No further review is required. The project ompany is required to inform IFC in the event of any change in nature or scope of its contemplated business or operations.

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