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8/6/2019 Transport Sector Brochure
http://slidepdf.com/reader/full/transport-sector-brochure 1/12
TRANSPORTATIONFOR WELFARE ANDGROWTH IN DEVELOPINGCOUNTRIESINVESTING, EXPANDING, ANDINNOVATING IN THE INDUSTRY
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What We Offer
As the largest multilateral source of loans and
equity finance for private enterprises in emerging
markets, IFC, a member of the World Bank Group,
brings the strength of our own $14 billion net
worth, global focus, local presence, and industry
expertise to bear for our clients. We offer:
• Tailored solutions that respond to client needs:
long-term debt, quasi-equity, and equity
financing products; local currency financing,
and tenures of up to 12 years. IFC Advisory
Services offer retail and country expertise across
multiple subsectors, support efficiencies in
financial restructuring.
• Track record of commitments that span the
globe: the transportation and equipment sector
portfolio includes 30 investments in
20 companies and nine countries.
• Leadership in sustainability: we are addressing
climate change related to CO2 emissions
and other greenhouse gases, and we help
increase the recycling of materials used in
manufacturing of transportation equipment.
TRANSPORTATION EQUIPMENT:
• Improving the flow of goods and mobility of people inemerging market countries
• Transferring technological and managerial know-how
• Creating skilled jobs
Since the 1960s, IFC has invested $1.3 billion in 70 transportation equipmentcompanies in 23 countries. Investments in the automotive and other transportationequipment sectors create opportunities and help reduce poverty by enhancing theflow of goods and the mobility of people, improving business opportunities, andraising standards of living and quality of life in emerging markets. IFC’s investmentsare creating jobs, building markets, advancing technology, and transferring managerialknow-how.
We play a critical global leadership role by ensuring that all of our projects set astrong example of environmental and social stewardship.
INVESTING IN TRANSPORT IN EMERGING MARKETS
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Development and Economic Impact
As a development institution, with a mission
to promote private enterprise growth and jobcreation in the developing world, IFC helps
clients understand the business case for social
and environmental responsibility: lower costs,
reduced political risk, increased productivity, and
brand enhancement. IFC’s transportation projects
have created:
• Over 67,000 direct manufacturing jobs, plus
thousands of indirect jobs in related service
industries such as maintenance, gas stations,
auto finance, and insurance
• Significant contributions to economic growththrough revenue generated by the sector
and indirectly through better access to goods,
services, and markets
• Managerial and technological know-how,
contributing to growth of manufacturing in
emerging market countries
• Improved corporate governance and higher
environmental, technical, and safety standards,
with emphasis on energy efficiency, climate
change, and cleaner production
• Strong foreign exchange earnings
• Enhanced supply chain management
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EXPERTISE ACROSSTHE SUBSECTORSIFC’s sectoral expertise,regional knowledge, andleadership in sustainabilityoffer significant value toour clients, in addition tothe full range of financialproducts we offer.Our industry knowledge spans the
range of production, from componentmanufacturing to vehicle assembly anddistribution. Our expertise extendsfrom the automotive sector to railand air transportation equipment andcomponents, shipyards, and selectiveautomotive consumer services suchas fleet management, car rentals, andconsumer financing.
Long-term partnerships with
industry leaders• Successful companies tend to grow in stages:
it is not simply a matter of a one-time capital
need or acquisition requiring a single financing
transaction. Instead, strong companies need
financial partners committed to establishing
longer-term relationships.
• IFC is a trusted partner: a strategic advisor
with financial stability, deep pockets, and
presence in the global marketplace, as well as
the expertise to provide guidance on future
directions based on a thorough understandingof industry trends and the company’s past and
current situation.
Fras-Le and Randon Group:Multiple financing rounds in
support of a local playerBrazil has emerged as a burgeoning cluster forthe automotive industry, causing automotivesuppliers to set up shop as well. Fras-Le is acomponents company that has grown as theoverall automotive industry has expanded. Amajority-owned subsidiary of the Randon Group,it is Brazil’s largest manufacturer of frictionmaterials, producing brake pads, brake linings,blocks, and clutch facings for trucks, buses, andautomobiles. In 2002, Fras-Le’s products became100 percent asbestos-free.
The company holds a dominant position in thedomestic after-market, and is a growing presenceon the international scene as well, exportingprimarily to Argentina, the United States, andEurope. Several rounds of IFC financing, includingequity and debt packages, have been supportingthe growth of this strong local player for the pastdecade helping Brazil strengthen its position as adestination of choice for the automotive industry.IFC also supports the ambitious growth plans ofFras-Le’s parent company, Randon Group, which
manufactures trailers and semi-trailers for trucksand rail transportation.
IFC’s role:
• Multiple rounds of long-term financing for
Fras-Le and Randon, totaling $65 millions
• Reduction in foreign exchange exposure risk
• Advice on process improvements to reduce air
and water effluents, improve product quality,
and achieve cost savings
• Enhancement of the country’s competitiveness:
support for a strong local player reduces
automotive manufacturers’ reliance on imports
of components
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BUSES: A FIRST STEP TOINDIVIDUAL MOBILITYStudies have shown that isolation and the lackof affordable transportation options contribute
to a host of social ills—poverty, bad health,
poor attendance in school, and a shortage of
economic opportunity. Increasing the accessibility
of affordable mass transit, including rolling
stock, is one way to begin to address some of
these complex issues. Expansion of mass transit
systems also helps reduce the traffic gridlock
that grips cities large and small around the
world, while optimizing the use of gasoline and
lowering carbon emissions.
Marcopolo: Comfortable, affordabletransportation for more people
Based in Caxias do Sul, Brazil, Marcopolo is
among the largest bus body producers in the
world. The publicly traded company partners
with industry leader Mercedes-Benz Mexico
through its Polomex subsidiary to assemble and
sell buses in Mexico. Marcopolo also operates
plants in Argentina, Brazil, Colombia, Portugal,
and South Africa, employing 8,000 skilled workers
around the world. IFC committed $38 million to
support the parent company and its expansion
into Mexico for this internationally competitive
technology leader in bus production, making
affordable transportation accessible to more
people in emerging market countries.
IFC’S role:
• $38 million in long-term financing for working
capital needs and equipment upgrades
• Advice on a more sustainable financing
structure and better financial management
• Advice on industry best practices from around
the world
AUTOMOTIVE COMPONENTS:EMERGING CLUSTERS IN
EMERGING MARKETS Automotive components companies are finding
tremendous potential in emerging market
countries. Nations like Brazil, China, India, and
Russia, feature strong manufacturing traditions,
a comparatively low-cost labor force, growing
consumer demand, and geographic proximity
to their customers – and each has become an
emerging cluster of automotive manufacturers.
The expansion of the industry offers strong
economic and development opportunities.
Recent IFC investments in thesebooming markets include:
ZMZ Bearings, Russia:
2007 project to support Daido Metal’s entryinto Russia through the acquisition of ZMZBearings, a leading local manufacturer ofhalf bearings for automotive engines. IFC
is providing a $5 million loan.
Launch Tech, China:
IFC equity investment in Launch Tech in 2005helped consolidate the company’s multipleleased facilities for its administration,manufacturing, and R&D functions into alarge complex in a Shenzhen technologypark. Launch Tech’s products includeautomotive diagnostic equipment, lifts,
and wheel aligners and balancers.
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Sabo: Flexible financing in support ofinvestment program to compete inthe global market
Sabo is a midsize, family-owned automotive
supplier based in Brazil, with operations around
the globe. The company produces oil seals,
gaskets, and hoses that are sold directly to the
major equipment manufacturers and to other
automotive component producers. While it
expands to meet growing demand, the recent
liquidity improvements in the Brazilian market
have not benefited midsize suppliers like Sabo,
for whom financing options tend to have shorter
tenors and carry more restrictions. IFC provided
longer-term financing that the company couldnot otherwise obtain, thus giving it a stable
funding platform to support rapid growth in
an uncertain and highly competitive business
environment. With Sabo being a key player in the
auto parts sector—an important contributor to
the country’s economy—its success and continued
growth will generate development impact by
contributing to the country’s GDP and increasing
export revenue, technological and management
know how, and training and employment.
These benefits will extend from Brazil into other
emerging markets as the company expands itsoperations globally.
IFC’s role:
• Providing $40 million in long-term financing
that allows the company to manage its financesprudently
• Long-term partnership includes guidance
on improving corporate governance,
environmental and social practices, and
assistance in broadening Sabo’s financing
sources
• Support for new cross-border investments
TBK: Environmentally-friendly supplier
for China’s surging automotive industryA joint venture between Japan-based brake
manufacturer Tokyo Buhin Kogkyo Co., Ltd,
and Changchun Shili Automobile Brake Parts,
a Chinese producer of brake friction materials,
is leading to the introduction of high-quality,
asbestos-free linings for drum brakes and pads
for disk brakes in commercial vehicles produced in
China. The JV (joint venture) company’s primary
customer is First Automotive Work Group, the
largest vehicle manufacturer in China, which
produces close to 1 million passenger cars and
commercial vehicles a year. IFC’s loan supportedconstruction of a new manufacturing facility
in Changchun, Jilin Province. The new plant
incorporates advanced technologies to improve
the quality of essential components, and
introduces greener industrial practices.
IFC’s role:
• Originally committed $4 million in financing
toward an $11 million construction project.
However, due to the depressed market
condition, the total project cost was reduced to
$8 million. IFC disbursed $2 million in 2006
• Support for technology transfer from an
innovative Japanese company to China, helping
improve the environmental profile and safety of
commercial vehicles
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PT TVSM: More two-wheelers forIndonesia
IFC’s investment in PT TVS Motor Company’s new
manufacturing plant in Karawang, Indonesia, will
allow the company to produce 300,000 motorcycles
a year to meet growing domestic demand,which topped 4.5 million in 2006. Although the
current two-wheeler market in Indonesia is highly
competitive, the country has the third-largest
market in the world after China and India, but still
a low per capita ownership.
Project sponsor, TVS Motor, is a member of the
TVS group, a leading supplier of automotive
components. TVS Motor, manufactures and sells
two-wheelers, employs 5,800 staff, has strong
in-house research and development capabilities,
and a deep supplier base, as well as a wide dealernetwork, with more than 2,500 retail outlets in
India. The new manufacturing plant is expected
to create 500 new jobs in Indonesia. Future plans
include developing a local supplier base and
expanding dealer network in Indonesia.
IFC’s role:
• $20 million in long-term financing
• Partnership boosts the sponsor’s confidence
and comfort level, given IFC’s strong local
presence in the market and relationships withthe government, financial institutions, and
private industry
• Support for cross-border investment: this is the
first expansion for the sponsor based in one
emerging country, as it moves into another
emerging country
TWO-WHEELERS: AFFORDABLE TRANSPORTATIONAs living standards improve in emerging market countries, there is a growing consumer demand for
personal transportation. Two-wheelers offer a more affordable alternative for consumers who cannotafford to buy a car. IFC supports companies that produce such alternative transportation due to their
potential positive impact: enabling transportation and increasing access to education, health care
services, and jobs. Whenever possible, IFC also supports zero-emissions technologies, such as electric
bicycles and scooters.
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INVESTING IN TRANSPORT IN EMERGING MARKETS
AEROSPACE:THE NEW FRONTIERGlobalization has contributed to the developmentof basic manufacturing industries in emerging
markets. Now, the focus is on increasing
skill levels and technological know-how so
that developing countries can gain a share
of value-added industries, such as aerospace
engineering and production. This effort includes
providing enough opportunities to keep highly
educated workers at home. IFC is supporting
the establishment of a more sophisticated
engineering and manufacturing base, which will
create more reasons for skilled workers to remain
in their home countries.
Embraer: Aircraft manufacturing in Brazil
Embraer is the world’s fourth-largest aircraft
manufacturer and the only one based in an
emerging economy. The company recently
introduced a new generation passenger plane,
with the help of IFC’s long-term financing. Even
before the first plane rolled off the production
line, the company had numerous orders from
airlines and leasing companies from around the
world. The company employs more than 14,500
people, helping reverse the brain drain of highly
skilled workers from the country. As a member
of Brazil’s prestigious BOVESPA Corporate
Sustainability Index, Embraer also demonstrates
the business case for sustainability: that the drive
for profit, environmental stewardship, social
responsibility, and corporate governance can all
align to achieve a strong triple bottom line.
IFC’s role:
• Long-term financing at a time when access to
financing sources was limited, given the risksascribed to lengthy product development cycles
in the aerospace industry and the sovereign risks
associated with an emerging market country
GREEN TRANSPORTATION:INVESTMENT IN THE FUTUREIn 2004 transportation in general contributedto 13 percent of global greenhouse gas emissions.
As a world leader in sustainability, IFC invests
in innovative projects – including those with
potential to revolutionize the entire concept
of energy efficiency and clean transportation.
As momentum builds for such new products,
IFC’s investments are helping forward-thinking
companies turn great ideas into marketable
products.
Electrotherm, India: Technology transferfor energy efficient, clean personaltransport.
Electrotherm produces electric scooters for
consumers in India who want a clean, inexpensive,
and reliable means of transport that is also
compact and easy to maneuver through the
country’s crowded streets. Electrotherm has
developed the electric two-wheeler, using some
of its core technology and competence in power
electronics acquired and perfected from its
induction furnace business.
The new vehicle is compatible with the harsh
Indian climate, comes into two prime categories
of speeds up to 25 kilometers an hour and 45
kilometers an hour, and costs about $600-$1,000.
Future plans include three-wheeled models and
hybrid buses to increase access to clean mass
transit. IFC’s $25 million investment is helping the
company expand its production and enhance its
competitiveness and energy efficiency.
IFC’s role:
• $25 million in long-term financing andquasi-equity
• Project helps reduce greenhouse gas emissions
and enhances energy efficiency
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OUR APPROACH
IFC seeks to partner withstrong, stable firms thathave an understanding oflocal, regional, and globalmarkets, a good track recordof success; and an abidingcommitment to transparentcorporate governance,social responsibility, and
environmental sustainability.
We look for:
• Fast growing manufacturing companies
• Investments in industrial restructuring,
including privatizations
• Foreign Direct Investments, including cross
border opportunities
• Investments in technology development
and dissemination that reduce impact on
climate change
• Companies of vehicle related service networks
including SMEs
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AUTOMOTIVE INDUSTRY: PROCESS INNOVATIONAND ENVIRONMENTAL LEADERSHIP
In an industry characterized by increasing competition,margin pressure, and regulatory and environmentalrequirements, automotive companies are –, of necessity,– leaders in product and process innovations. Suchinnovations enhance the competitive marketplace andlead to higher productivity and economic growth. IFCprojects seek to maximize the use of best industry andenvironmental practices, enabling our clients to compete
successfully and contribute to long-term domestic andglobal sector growth.
One such project, with Turkish automotiveindustry leader Standard Profil is supportinginnovation, while facilitating expansionof the automotive supplier industry in anemerging market country. Headquarteredin Istanbul, the company is Turkey’s largest
manufacturer of automotive sealing systemswith plants located in Bulgaria as well asin Turkey.
IFC’s equity and loan financing is helpingStandard Profil enhance its researchand development capabilities, allowingthe company to focus on developingnew generation sealing systems usingalternative, nonconductive, andnitrosamine-safe compounds. Thesuccessful, award-winning companyhas elevated its environmental focusand innovation to the strategic level,demonstrating a strong businesscase for sustainability.
INVESTING IN TRANSPORT IN EMERGING MARKETS
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IFC’S TRANSPORTATION EQUIPMENT PORTFOLIO
As of July 31, 2007, IFC’s commitments in thetransportation equipment sector totalled $324 million,with 90 percent in the automotive industry. IFC’s mainautomotive investment destinations include Brazil,China, India, Mexico, Russia, and Turkey.
For more information about IFC and our transportation equipment investments,please contact:
Sabine Schlorke 1-202-458-5480 or [email protected]
Emmanuel Pouliquen 1-202-473-9114 or [email protected] Castro e Silva 1- 202-458-1811 or [email protected]
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® 2007 INTERNATIONAL FINANCE CORPORATION
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433 U.S.A.
Telephone: 202 473-1000
Facsimile: 202 974-4384
Internet: www.ifc.org
Printed on material that meets internationalenvironmental standards and is from sustainablymanaged commercial forests.