FULL TITLE: Obtaining Funds from New Financial Instruments and New Tools for Managing Asset and Liabilities ROOM: Aberdare Hall FACILITATED BY: MFX Solutions Mr. Howard Brady Mr. Brian Cox Ms. Sonia Mukhi

1. Making African drums in Colombia Photo Johan Sauty © BlueOrchard Obtaining Funds from New Financial Instruments and New Tools for Managing Assets and Liabilities. BlueOrchard Finance SA 10 April 2010

2. Workshop schedule Questions and answers/conclusion 30 12:30 12:00 Mock loan negotiation 30 12:00 11:30 Financing: the specifics of loans 40 11:30 10:50 Coffee break 20 10:50 10:30 BO system demonstration 10 10:30 10:20 Financing: evolution, options and actors 50 10:20 9:30 Introduction to BlueOrchard Finance 10 9:30 9:20 Introduction to course and Expectations 20 9:20 9:00

3. BlueOrchard is a leading commercial microfinance intermediary , providing loans to microfinance institutions through its subsidiary BlueOrchard Finance S.A. and investing in the equity of microfinance institutions and microfinance network funds through its subsidiary BlueOrchard Investments Sàrl. Our mission BlueOrchard’s mission is to empower the poor world-wide and improve their quality of life by promoting income-generating activities through private investments in microfinance Our philosophy We are convinced that microfinance investments can simultaneously produce social progress and financial returns . This is what makes microfinance a powerful tool to sustain economic development and alleviate poverty; as well as an attractive asset class, worthy of inclusion in any diversified investment portfolio strategy. Our approach We provide innovative financial instruments and solutions for placements in microfinance , bridging the gap between capital markets and microfinance institutions. W e generate profitable returns on investments while supporting the development of millions of promising small enterprises. We believe in creating value through solid long-term relationships by providing debt and equity to microfinance institutions in all stages of their development . We share their mission to provide financial services to those who have few resources and excluded from mainstream financial services. We regard our cooperation with them as the primary means to support financial and social integration worldwide. Our values We believe in establishing trust through transparency . We attach high importance to our capacity to innovate . We treasure our integrity and professionalism . We work with zeal and enthusiasm . About BlueOrchard

5. Situation as of December 2009, figures include both debt and equity placements BlueOrchard office Countries where our exposure is less than 2% of aggregate managed portfolios Countries where our exposure is between 2% and 7% of aggregate managed portfolio Countries where our exposure is over 7% of aggregate managed portfolio BlueOrchard’s global reach

7. DEBT SUB-DEBT EQUITY DEPOSITS MFIs - Evolution in Financing needs as they grow… Tier 2 Tier 1 MFI « XYZ » MFI « XYZ » MFI « XYZ » MFI « ABC »

8. Various options for financing Senior Unsecured Debt Subordinated Debt Senior Secured Debt Deposits Debt Preferred Shares Common Shares Equity Risk to investors Cost to MFI

9. Choosing financing: what type of loan? Term Loans: Fixed maturity loan, often with an amortization schedule Senior Secured: Medium term (~1-3 years), with collateral Senior Unsecured: Medium term (~1-3 years), no collateral Subordinated: Long term (~5-10 years), no collateral Revolving Credit/Credit Lines: For seasonal demand/ liquidity crunch; ability to borrow and repay repeatedly up to the agreed limit

11. Domestic vs. international markets International Markets Domestic Markets MFI Funding Source of Slide: MicroRate – Review of Microfinance Investment Vehicle Market (October 23, 2006) Microfinance Investment Vehicles MIVs Development Agencies, Foundations & NGOs acting as investors in microfinance Regional Banks - local and second tier Private local investors Private, Social, Commercial, Institutional Investors

12. Microfinance institutions: different levels of maturity today - promising perspective for tomorrow Tier1 Tier 2 Tier 3 Tier 1: solid, well managed, profitable, fast growing microfinance institutions Tier 2: promising, transforming and growing microfinance institutions Tier 3: Start-ups, NGO, small scale, niche player microfinance institutions

14. Investment Process Risk Management STEP 2 Due Diligence STEP 3 Risk Scoring STEP 4 Portfolio Management STEP 1 Qualification of new Investments BlueOrchard’s 4-step investment process and risk management

15. STEP1 & 2 Qualification of Invest. & DD Comprehensive data collection and on-site due diligence visits Audited financial statements of previous 3 years Business Plan External rating reports MFIs eligibility criteria 3 year track record Total assets > $1 MN Operational self-sustainability Profitability Acceptable credit risk Investments are considered within the context of the Country Risk Profile STEP 3 Risk Scoring STEP 4 Portfolio Management BlueOrchard’s internal rating 24 quantitative and qualitative factors, including the following: Quality of management Strategy and business plan Corporate governance Transparency Staff and organizational infrastructure Liquidity and funding Currency management Balance sheet ratios Profitability Loan portfolio management Social impact BlueOrchard’s Credit Committee Loan proposal submitted to credit committee: Review of the MFI’s business strategy, financial record, past results and other critical factors relevant to the credit decision Decision on interest rate and loan terms Portfolio management Loans to MFIs are considered within the context of appropriate diversification limits and impact on overall portfolio return and risk BlueOrchard’s 4-step investment process and risk management

24. Thank you! BlueOrchard Finance S.A. 32 rue de Malatrex, 1201 Geneva, Switzerland Tel.: +41 22 596 4777 Fax: +41 22 596 4799 [email_address] BlueOrchard Finance USA, Inc. 1140 Broadway, #304, New York NY 10017, USA Tel.: +1 212 944 8748, Fax: +1 212 944 8749 [email_address] BlueOrchard Finance America Latina S.A.C. Pasaje Mártir Olaya 129 Lima 18, Peru Tel.: + 511 255 7049 [email_address] www.blueorchard.com Raising cattle in Mongolia P hoto Johan Sauty © BlueOrchard