Sumitomo: Sumitomo owns 99.6% shares in OTO. Sumitomo was established in 1919 and as of September 2009, its total assets and equity amounted to US$78 billion and US$15 billion respectively. IFC has partnered with Sumitomo in several countries. Mr. Djohan Marzuki: Currently Mr. Marzuki is the President Director of OTO. He owns 0.24% shares in OTO. From 1994 until present, Mr. Marzuki is also the President Director of PT. Oto Multiartha and PT Summit Auto Group, both are Sumitomo’s subsidiaries. Before Mr. Marzuki’s involvement in Sumitomo’s subsidiaries, Mr. Marzuki was the General Manager and Deputy Chief Executive in PT. Astra International for Nissan Sales Operation from 1990 to 1993. PT Sinar Mas Multiartha (“SMM”): SMM owns 0.16% of shares in OTO. In 1990, SMM used to own 30% of OTO together with Sumitomo (40%), Sumisho Lease Co.Ltd (15%), Sumisho Auto Lease Co. Ltd (10%), and The Sumitomo Trust and Banking Co. Ltd (5%). In 2002, 2003, and 2009, Sumitomo injected capital to strengthen OTO’s capital and SMM was not in the position to inject any capital at that time, therefore its shares became diluted.

The proposed Project involves an IFC financing package of up to $75 million which consists of: (i) a senior local currency loan of up to $50 million equivalent in rupiah (the “A1 Loan”); and (ii) a senior US dollar loan of up to $25 million which will be used as an umbrella for a separate syndication program to be organized by IFC (the “A2 Loan”).

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity

* These investment figures are indicative

OTO is headquartered in Jakarta, Indonesia and operates over 100 branches and service points located throughout Indonesia. In terms of asset size, OTO is ranked as the 3rd largest motorcycle financing company in Indonesia, up from 4th in 2008. The proposed investment will support OTO to expand its reach to more low income household. OTO plans to open more branches in the frontier provinces.

The proposed Project is expected to have Development Impacts in the following areas: 1. Deepening the NBFI sector Indonesia financial sector is still heavily dominated by banks, which accounts for 80% of the financial sector assets. Indonesia needs to develop Non-Banking Financial Institution (NBFI) sector, which can efficiently provide financing to consumers and SMEs through its ability to lower operational costs and deal with much smaller customers than banks would like to do. Additionally, NBFI can provide healthy competition to banks which eventually foster the development of financial sector even further. The proposed Project will provide OTO with adequate long-term fix rate financial resources for its growth. IFC support will help OTO develop its own funding sources, build the ability to compete with the banking system on an ongoing basis, and provide efficient, competitive financing to consumers. 2. Increasing access to motorcycle financing for low income households OTO customers are mostly low income households who do not have bank accounts. IFC financial support to OTO will help OTO expand its portfolio and networks to more frontier provinces, and hence increase access to finance to low income households for acquiring personal transportation which is important to their business needs and mobility. 3. Strengthening the micro and small business sectors Motorcycle is an efficient mode of transportation to deliver goods and services. Hence, a large number of motorcycles owners use their motorcycles as part of their SME/ micro businesses. The proposed Project will facilitate the increase of motorcycles financing available to SME/ micro businesses which is necessary to expand their operations.

The proposed Project allows IFC to play an active role in: 1. Increasing the availability of Long-term Fixed Rate Local Currency Funding While OTO has access to the local bond and bank markets, its sources of funding are not adequate to meet its business needs. IFC financing facility through the proposed Project will provide an alternative, not available from other sources, for OTO to lengthen the maturity of its funding and to reduce its market risks. 2. Mobilization In the proposed Project, IFC will set aside US$25 million out of the total US$75 million as the A-loan umbrella for future syndication program. IFC will mobilize more long-term funding for OTO through IFC syndication program which is expected to close by December 2010. 3. Strategic Partnership While most lenders have a single faceted relationship with OTO, IFC would be a strategic partner to OTO in several areas especially those related to expansion of the product offering. OTO valuable data base of over 2 million customers can be leveraged for cross selling of other microfinance products such as micro housing finance and micro insurance.

This project consists of a follow-up IFC loan to a motorcycle finance company to finance its expansion. It has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure given limited perceived risks. No further review is required. The Sponsor is required to inform IFC in the event of any change in nature or scope of its contemplated business or operations.