ebrd presentation october 2015 innovation bootcamp (1)

October 2015

European Bank for Reconstruction and Development

Table of Contents

A. Introduction to EBRD

B. EBRD Financing

C. Enterprise Expansion Fund (ENEF)

D. Case Studies in Macedonia

2

A. Introduction to EBRD

3

What is EBRD?

4

• International financial institution,

(IFI) established in 1991, owned by

the governments of 65 countries and

EU and EIB

• Headquartered in London, the EBRD

invests in 35 countries across central

and eastern Europe, central Asia

southern and eastern Mediterranean

region (Egypt, Jordan, Morocco,

Tunisia)

• Capital base of €30 billion and circa

€ 95 billion of cumulative

commitments

EU 27 Countries (1)

58.7%

EBRD region excluding EU

13.8%

Others 8.7%

USA 10.1%

Japan 8.6%

Shareholding structure - EBRD has a AAA rating from all

three main rating agencies (S&P, Moody’s and Fitch)

(1) Includes European Community and European Investment Bank (EIB)

each at 3%. Among other EU countries: France, Germany, Italy, and the

UK each holds 8.6%

EBRD’s objectives achieved through

financing the private sector

5

AAA/Aaa rated multilateral development bank

Invested over €101 billion in more than 4,317 projects since 1991

In 2014:

•€8.9 billion invested in 377 projects •Private sector accounted for 72% share •Debt 85%, Equity 10% & Guarantee 5% As at end September 2015 •€3.8 billion invested in 180 projects In Macedonia: •€1.5bn invested in Macedonia in 97 projects •Current active portfolio of €789m •47% in the private sector share of cumulative investment

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Net c

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(A

BV

)

Debt ABV

Equity ABV

Net Cumulative Business Volume

€ billion

Net cumulative business volume €101bn

EBRD: Countries of Operations

6

EBRD: Investment Portfolio

7

Private Sector72%

State Sector28%

Portfolio Breakdown by Sovereign vs.

Private Sector

Portfolio Breakdown by Sector

8%

11%

1%

3%

3.3%

33%

9.8%

5.6%

15%

10.6%

Agribusiness - 8%

Manufacturing and Services -11%

Information & CommunicationTechnologies - 1%

Property and Tourism - 3%

Equity Funds -3.3%

Financial Institutions - 33%

Municipal & Env Inf - 9.8%

Transport - 5.6%

Natural Resources -15%

Power & Energy -10.6%

B. EBRD Financing

8

EBRD Product Flexibility tailored

to project needs

9

Equity

• Common stock or preferred

• Minority position only (up to 35%)

• Mezzanine

• Other

• guarantees

• currency swaps

Loans

• Senior, subordinated, convertible

• Long Term (up to 10y or more) or

Short Term revolving

• Floating/ Fixed rates

• Choice of currencies

(€, US$, Local currency)

EBRD: Project Cycle, Tenors and Financing

10

• A project from Origination to Approval

typically takes 3 to 6 months,

provided all necessary information is

available and depending on the

complexity and length of negotiations

• The total project cycle from

origination to final repayment can

range from 1 year, for working capital

or trade financing projects, to 10

years for long term investments

• EBRD financing in individual projects

has ranged from less than €1 million

to more than €150 million

9. Completion

8. Sale of Equity

7. Repayments

6. Disbursements4. Final Review

5. Legal Documentation

& Board Approval

3. Structure Review

2. Concept Review

1. Origination

• Stages of Project Cycle

Key strengths of EBRD

11

Institutional

• Strong, internationally recognised

financial partner with long-term

perspective

• Close working relationships with

governments and shareholders

• Political leverage due to EBRD’s unique

mandate and shareholder structure

• Preferred Creditor Status

• AAA credit rating

• Close to market sources of capital, filling

“market gaps”

Operational

• Extensive knowledge of local economy,

business environment and practices,

maintaining local presence

• Engaged minority partner for business

• Business partner who shares risks,

including political

• Catalyst for accessing additional equity,

debt and trade finance

• Financing both private and public sector

clients

• High standards for corporate governance

and compliance

c. Enterprise Expansion Fund

(ENEF)

12

What is ENEF?

13

Geographic expansion of the Bank’s region

of operations

A delegated facility for equity and quasi-equity investments, as well as tailor-made debt financing

Established jointly by the EBRD and the Italian Government in 2006

For investments in the Balkans (Albania, Bosnia & Herzegovina, Bulgaria, Croatia, FYR Macedonia, Kosovo, Montenegro, Romania, Serbia), Turkey, and the SEMED region (Egypt, Jordan, Morocco, Tunisia)

To meet the growing financing needs of dynamic local SMEs, not sufficiently supported by other financing sources

The Enterprise Expansion Fund (“ENEF”) is:

A fund for equity and quasi-equity finance

Established jointly by the EBRD, EU, EIF and DEG in February 2014

For investments in the Western Balkans (Albania, Bosnia & Herzegovina, Croatia,

FYR Macedonia, Kosovo, Montenegro and Serbia)

To meet the growing financing needs of dynamic local SMEs, not sufficiently

supported by other financing sources

With the EBRD acting as Investment Advisor

ENEF resources

22 October, 2015 14


of operations

€38.5 million of initial capital provided by EBRD (€19 million), EIF (€14.5 million)

and DEG (€5 million), and matched one-for-one by a co-financing facility provided

by the EBRD for a total of €77.0 million

€9.5 million of Technical Cooperation funds provided by the EU for project

preparation, pre- and post-investment technical assistance

A team of dedicated bankers at the EBRD located in London as well as the

EBRD’s resident offices in Belgrade, Podgorica, Pristina, Sarajevo, Skopje, Tirana

and Zagreb

Streamlined investment approval process

What are the Objectives of ENEF?

22 October, 2015 15


of operations

Enhancing competitiveness and product quality: strengthening market

competitiveness and improving the quality of goods and services provided

Innovation: introducing new, replicable products and technologies to achieve

better use of labour, higher productivity and efficiency improvements

Setting standards for corporate governance: encouraging investee companies to

apply higher standards of corporate governance and business conduct

Who is eligible to apply for financing?

22 October, 2015 16


of operations





Eligible investments: expansion, restructuring or acquisitions of existing private

businesses

Eligible sectors: a wide range of sectors, with only few exceptions (weapons,

spirits, tobacco, gambling). All investments must be in line with sound

environmental principles

Size of investments: individual investment could range between EUR 1 million and

EUR 10 million (including the co-financing provided by the EBRD)

Target Stake for equity investments: (preferably) in the range of 20 to 35% of the

capital of the company

Investment horizon: a period between 3 and 10 years (usually, 5-7 years)

Value Creation post-investment

22 October, 2015 17


of operations





EBRD and ENEF have a strong commitment to improving the corporate governance

of the companies they invest in and increasing their value. To do so, they would:

Propose an experienced industry expert/ banker to sit on the Board of Directors of

the company (if agreed) in order to advise on strategic issues

Hire suitable technical consultants (if necessary) to help the company in the

implementation of the project

Encourage management to adopt rules and procedures for good corporate

governance and increased transparency (IFRS accounting, etc.)

Encourages management to commit to a value creation plan to achieve capital

appreciation over time

As minority shareholders and financial investors, EBRD and ENEF would not interfere

with the day-to-day management of the operations of the companies. Yet, they would

look for shared corporate governance when it comes to strategic and major financial

issues

EBRD Exit from Investments

22 October, 2015 18


of operations





When the company reaches maturity, EBRD will sell its stake, as its role in helping

the company would have been achieved

The exit method as well as the time of the exit should be agreed in advance with the

majority owners

Exit can be done in one of the following two ways:

Sale to a third party: commercial sale (to a strategic investor), IPO, secondary buy-

out or

Sale back to the original owner(s): through put and call option agreement or re-

leveraging of the company

D. Case Studies in Macedonia

19

Vitaminka

Company Information

• Join Stock Company founded in 1956

• largest branded food manufacturer in the country

Investment Details

• € 4.0 million debt financing (2007)



Purpose of investment

• Purchase equipment for production of moulded and soft biscuits

• Purchase of a new packaging line for crisp snack products

• Purchase of new chocolate production line

20

Vitalia

Company Information

• Limited liability company owned by a local entrepreneur and his family

• Health food producer and trader

Investment Details

• € 1 million of ordinary equity stake (2007)


• Completion of the production line for crunchy muesli

• Purchase of a new packaging machine

• Construction of a new warehouse

21

Tikves

Company Information

• Joint stock company listed on the local stock exchange

• Largest wine producer in South Eastern Europe

Investment Details

• € 6 million ordinary equity stake (2008)



• Increase the higher value/brand wines in the company’s portfolio

• Modernise production facilities and strengthen brand name and distribution to increase

exports

• Additional working capital

22

http://www.macedoniadaily.org/

Zdravje Radovo

Company information

• Limited liability company, founded in 2003

• Producer of dairy products

Investment details

• € 1 million debt financing (2009)

• € 1 million debt financing (2011)


• Increase of the assortment with new value added products under the Company’s brand

umbrella

• Modernization of the production capacities

• Working capital

23

MIK Sveti Nikole

Company information


• Meat Processing Company

Investment details



• Total redaction of the energy and operational costs of the Company by 39%:

• Replacement and modernization of the existing steam boilers, screw

compressors and cooling system;

• Replacement of the old insulation panels in the cooling chamber;

• Upgrade of the Waste water treatment plant equipment

24

Neotel

Company information


• Internet Services Provider, Data Communication Provider and fixed-line telephony operator.

Investment details



• Expansion of the Fibre Optic Infrastructure with the total length of 323 km

• Improving backbone redundancy by enclosing Western cities in a fibre optic ring;

• Reducing costs associated with leased lines;

• Improving services for B2B customers in Western FYR Macedonia

25

Vipro

Company information


• Vegetable and Fruit Processing Company

Investment details

• Loan of € 1.3 million (2013) through Medium-Sized Co-Financing Facility with Ohridska Banka – Societe Generale.

• EBRD co-financing portion of € 1.3 million.


• refinancing of the OBSG loan exposure;

• completion of two additional production lines and construction of cold

storage facility; and

• support for the related working capital needs.

26

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=4gGyISxvGlJnHM&tbnid=cS6s57hsvYXZIM:&ved=0CAUQjRw&url=http://www.vipro.com.mk/&ei=vZd8U8qOOOyO7QaEtYDQDg&bvm=bv.67229260,d.ZGU&psig=AFQjCNEkKErdIfTX77cKLcIZKIOjbqqpFA&ust=1400760624246695

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Skopje City Mall

Company information

• First modern, institutional class retail centre in Macedonia,

• Total gross leasable area of ca 37,000 sqm

• A benchmark for the local real estate market and represents a new

concept in the country, including the first Carrefour and the first

Inditex/Zara of the country as well as a mutiplex cinema

• Successfully opened to the general public on 4 October 2012 and is now

99% leased.

Investment details

• EUR 18.9m subordinated loan (2011)


• Development and construction of the first Western style shopping mall in

the country.

27

Presentation on EBRD financing - VB

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Contacts

22 October 2015 21

For all further enquiries, please

contact:

Name: Danica Piseva

Title: Senior Analyst

Tel: +389 2 3297 800

Email: [email protected]

Name: Irina Avramska-Pashovska

Title: ENEF Analyst

Tel: +389 2 3297 800

Email: [email protected]

Soravia Center Skopje, 7th floor,

Filip Vtori Makedonski No. 3;

www.ebrd.com

mailto:[email protected]




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ebrd presentation october 2015 innovation bootcamp (1)

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