MIGAs Small Investment Program

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MIGAs Small Investment Program
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What is SIP?
MIGAs Small Investment Program (SIP)

• The Small Investment Program (SIP) is designed to
  grow MIGAs support for small and medium-sized
  investors, investing (lt5 million) in SMEs by
  offering
• a standardized package of risk cover that
  includes Currency Transfer Restriction,
  Expropriation, and War and Civil Disturbance
• an upfront premium rate
• a quick and efficient underwriting process
  (including no board concurrence for up to 150
  million or a period of 3 years)
• a single application form which can be completed
  online, no preliminary application is required
• no application fee for small and medium investors
• standardized contract

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What/Who is Eligible?
MIGAs Small Investment Program (SIP)

• What is eligible?
• Investments between member countries
• New investments
• start-up
• expansion, modernization, restructuring,
  refinancing, or privatization
• Types of Investments
• equity
• shareholder loans
• loan guarantees
• non-shareholder loans
• non-equity direct investment

• Who is eligible?
• Individuals
• nationals of MIGA member countries
• Corporations
• incorporated/principal place of business in MIGA
  member country
• Foreign Investors
• Local Investors

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Size of Investment
MIGAs Small Investment Program (SIP)

• Investments in the non-financial sector if they
  are related to the establishment of an SME, or
  made into an SME, in a developing country
• The SME must fulfill two out of three criteria
• no more than 300 employees
• total assets not be more than US15 million
• total annual sales should not be more than US15
  million
• Investments in the financial sector are eligible
  if they are geared towards providing financial
  services for SMEs, and at least 50 of clients
  related to the investments are SMEs as defined
  above

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Terms of the SIP Guarantee
MIGAs Small Investment Program (SIP)

• Terms of up to 10 years (3 years minimum), with
  possibility of extension at end of term of up to
  5 years
• Maximum amount guaranteed is US5 million SIP
  covers up to 90 equity and 95 debt
• Guarantee Coverage Currency Inconvertibility and
  Transfer Restriction, Expropriation, War and
  Civil Disturbance
• Breach of Contract is not covered

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SIPPricing
MIGAs Small Investment Program (SIP)
Examples of SIP pricing China 45 bp
Indonesia 45 bp Cambodia 75 bp Argentina
175 bp Philippines 45 bp Vietnam 45 bp
Nigeria 125 bp Sri Lanka 75 bp

• SIP has 4 premiums 45 bp, 75 bp, 125 bp and
  175bp. These 4 pricing buckets are based on
  different risk levels
• Infrastructure Premiums are determined on a case
  by case basis

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SIP Portfolio 2005-2006 - US24m
MIGAs Small Investment Program (SIP)

• South America
• El Salvador
• Ecuador

• Asia
• Indonesia

• Africa and Central Asia
• Madagascar
• Madagascar
• Sierra Leone
• Sierra Leone
• Iran
• Afghanistan

SIP Applications Q1 2006-2007

• Africa
• Madagascar
• Burkina Faso (Approved)
• Cameroon
• Angola

• Central Asia
• Afghanistan (Approved)
• Afghanistan (Signed)

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SME Investment Fund and MIGA(65m multi-country
coverage)
MIGA GUARANTEES RISK MITIGATION

• Credit enhancement
• Improves the overall risk-return profile of the
  Funds bond issuance
• Lowers cost of financing
• Confidence
• Deterrent against host government interference
• Gives bond holders confidence in investing in
  frontier markets.
• Improve risk management for fund managers
• MIGA mediation in case of investment disputes
• Efficiency
• Leverage MIGAs global presence and local
  knowledge
• Deliver cost synergies by integrating Fund and
  MIGA due diligence

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SIP Case Study Malagasy Hotel Acquisition
MIGAs Small Investment Program (SIP)

• Project Mauritian Investor acquiring a business
  hotel in Antananarivo.
• amount and type of investment covered 3.38
  million Equity.Tenor contract 5 years
• new capital to rationalize the property, expand
  and refurbish the Hotel
• MIGA provided political risk coverage for
  transfer restriction risks, expropriation and war
  and civil disturbance
• impacts the workshop will provide 35 new jobs
  health insurance for their families.

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SIP Case Study Sierra Leone Broadband
MIGAs Small Investment Program (SIP)

• Project Israeli start-up in Sierra Leone
• amount and type of investment covered 2.85
  million Equity.Tenor contract 5 years
• Investment to capitalize a new business providing
  broadband satellite service in Freetown.
• MIGA provided political risk coverage for
  transfer restriction risks, expropriation and war
  and civil disturbance
• impacts provide reliable and efficient broadband
  service to Sierra Leone.