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AZERBAIJAN:

EXPERIENCE ON EQUITY INVESTMENTS, TRADE

FINANCE, AND SME LENDING

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PRESENTATION OVERVIEW

EQUITY INVESTMENTS

BRIEF PROJECT OVERVIEW

SME / TRADE FINANCE LENDING

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PSCEP OVERVIEW

Funding: US$6.6 mm

Time Frame: October 2008 – September 2011

Purpose: Enhance the competitiveness of key economic sectors through sustainable investments and provision of technical services

Approach: Value chain, focusing on ten subsectors of the non-oil economy, including agro-industry, packaging materials, cold chain, ICT, light manufacturing. Building associative enterprises

Access to Finance: Major component with aggressive targets: $50 million in first year

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Equity Investments

• Demand up significantly due to Soviet-era depreciated investments, financial crisis

• Key strategic relationships with government and quasi-government investment funds

Azerbaijan Investment Company (AIC) Caspian International Investment Company (CIIC) Azerbaijan – Kuwait Investment Fund (AKIF)

• Working on ICT related GDAs and Cold Chain and logistics joint ventures

Partnerships with AIC, CIIC, and AKIF one of great timing, synergies

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Equity Investments

• Providing assistance on:

sector selection, analysis deal flow (regional investment road shows) company assessments / due diligence transaction structure

• Currently reviewing 6 transactions requiring investments exceeding $40 million

Partnerships with AIC, CIIC, and AKIF one of great timing, synergies

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Trade Finance / SME Lending

• Selected six “middle market” banks to initiate programs

building on ongoing but soon ending USAID financial sector project

strong management interest in participating, existing SME lending programs

signed MOUs with commitment to allocate $6 million dollars each in trade finance products

• Introduction of “new” trade finance products purchase order financing inventory financing leasing

Banks appear to have liquidity to lend; moving away from entirely collateral based lending key challenge through crisis