Manila, June 1, 2004 —
The International Finance Corporation, the private sector arm of the World Bank Group, has agreed to subscribe for up to $15 million equivalent in shares of Manila Water Company and to provide a $30 million corporate loan package. The equity and debt funding will support Manila Water’s business plan, which focuses on reducing water losses; expanding service, particularly to lower income residents; improving water supply and wastewater facilities; and developing new water sources. Today’s agreement follows an IFC loan of $30 million in 2003, bringing total IFC financing to Manila Water to $75 million.
“Our decision to become a shareholder shows our confidence in Manila Water’s business model, which creates shareholder value by setting a high standard for public service, operating in an environmentally and socially sustainable manner, and ensuring solid corporate governance.” said Javed Hamid, IFC director of East Asia. "Since IFC extended its first loan in 2003, Manila Water has continued to build upon its excellent record of quality and efficiency of service while improving its profitability. We are particularly impressed by Manila Water’s dedication to providing safe, reliable and affordable services to the most vulnerable of urban residents.” said Francisco Tourreilles, IFC director of Infrastructure.
Antonino Aquino, president of Manila Water said, “We view this as a very significant development for Manila Water, which is now preparing for its initial public offering early next year. IFC's equity infusion supports our strategic thrust towards business expansion, not only within our original concession area, but also beyond. The company is presently looking at potential water and wastewater investments in other areas of the Philippines, as well as in the Asian region."
Manila Water won a competitive tender in 1997 to operate the Metro Manila East water and wastewater concession, serving approximately four million people. It inherited facilities that require significant rehabilitation. Since taking over, Manila Water Company has invested over $161 million. Manila Water’s achievements to date include connecting over one million people, more than half of whom are low-income and living in informal settler communities; raising the percentage of areas receiving water 24 hours per day to 83 percent from 26 percent at its start; and making large strides in efficiency. Manila Water today has less than three employees per connection, compared with more than six per connection in 1997.
IFC has been investing in the Philippines for over 40 years, with commitments of $1.2 billion for its own account and nearly $700 million in loan syndications. In the fiscal year that ended June 30, 2003, IFC committed five projects for a total of $66 million in the infrastructure, financial markets, health and education and information technology sectors. In the fiscal year ending June 30, 2004, IFC expects to provide financing for up to six projects involving transactions exceeding over $100 million.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through 2003, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of 2003 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
