EBRD in BiH

Report
European Bank for
Reconstruction and Development
Sarajevo, April 27th 2010
Structure of Presentation
1. Introduction to EBRD
2. EBRD in Bosnia and Herzegovina
3. Manufacturing and Services
4. Manufacturing and Services in Bosnia and Herzegovina– case
studies
5. Agribusiness
6. Agribusiness in Bosnia and Herzegovina – case studies
6. Financing with EBRD – financing instruments and available
programmes
7. EBRD contacts
1. Introduction to EBRD
What is the EBRD?

International financial institution owned by 63 countries
and two inter-governmental institutions.

Operates through the Head Office in London and Resident
Offices in 30 countries of operation.

Works in both the public and private sectors.

Financing is provided directly or through financial
intermediaries.
EBRD is a matrix organization

COUNTRY BUSINESS GROUPS
1.
Central and Southeastern Europe
2.
Russia
3.
Turkey, Eastern Europe and Central Asia

SECTOR BUSINESS GROUPS
1.
Energy
2.
Infrastructure
3.
Financial Institutions
4.
Industry, Commerce and Agribusiness (Manufacturing and Services
included)
What are the EBRD’s objectives?

Support economic growth in its countries of operation.

Promote entrepreneurship, competition and privatisation.

Promote adoption of strong corporate governance,
including environmental sensitivity.

Promote foreign direct investment and mobilize domestic
capital.

Provide technical assistance.
EBRD’s cumulative investments amount to
more than EUR 47.7 billion in 2009
Cumulative commitments
(billions €)
44
40
36
32
28
24
20
16
12
8
4
0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Unaudited as at 30 September 2009

The EBRD is the largest single
investor in the region and
mobilizes significant foreign direct
investment beyond its own
financing.

As of end 2009, the Bank had
cumulative commitments of € 47.7
billion.

One of the largest Investors in the
region – up to February 2010
€ 6.2 billion committed in the
Infrastructure, Financial and
Private Corporate sectors.
2. EBRD in BiH
BiH Strategy

Enterprise Sector: support large enterprise privatizations, support
medium-sized local and foreign private companies, reach SMEs
through the Local Enterprise Facility.

Infrastructure: Assisting the country in upgrading its core road
network, support the railway and aviation sector, implement
projects in the municipal infrastructure sector within each entity,
assist the sector commercialisation.

Financial Sector: Continue with the support to MSMEs through
the local banking sector and non-bank microfinance institutions
(NBMFIs), support the development of the remaining locally owned
banks and facilitate the entry of new investors in the sector.
EBRD in BiH
• To date, EBRD signed 78 projects with cumulative business
volume of more than EUR 1.1 billion
• From February 2007 to February 2010 the EBRD signed 35
projects amounting to EUR 624 million and mobilized additional
investments of more than EUR 600 million.
Bosnia and Herzegovina:
EBRD financing 1996-2009
State
Private
Total
300
250
EUR million
200
150
100
50
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Bosnia and Herzegovina: EBRD portfolio by
sector
MEI
Agribusiness 1%
5%
FI and MCO
22%
General
Industry
4%
Power &
Energy
12%
Transport
54%
Telecoms
1%
3. Manufacturing and Services
Manufacturing and Services

New business Group, previously known as General Industry
Group created within the Bank – Industry, Commerce and
Agribusiness

Response to the crisis and growing demand to support the
sectors in the EBRD region

New unit within ICA Group – Manufacturing & Services
Manufacturing and Services
New structure :


Regionalization of bankers to
lead and support the M&S
business on a regional basis
10 centers of excellence will
be established to concentrate
on industry expertise:
1.
Chemicals and Petrochemicals
2.
Capital Goods
3.
Consumer Goods
4.
Retail
5.
Industrial Logistics
6.
Pharmaceutical, Medical
Equipment and Healthcare
7.
Construction & Materials
8.
Automotive & Parts
9.
Industry Metals
10.
Forestry & Paper
Manufacturing and Services in BiH
SELECTED CORPORATE SECTOR INVESTMENTS:

Arcelor Mittal Zenica – senior long-term loan

Natron Hayat Maglaj – senior long-term loan

Tvornica Opeke Sarajevo – senior long-term loan
Selected transactions: Arcelor Mittal Zenica

Signed in 2005

€25 million EBRD loan




The acquisition of the BH Steel by Mittal Steel has transferred a
major asset of the BiH economy to the private sector.
The Bank’s participation in the operation contributed to the success
of this privatisation and provided a demonstration effect for other
potential investors in BiH.
The Bank has committed close to €70m to Mittal Steel in Bosnia
and Herzegovina, Kazakhstan, Romania, FYR Macedonia.
EBRD is considering additional financing for the environmental
protection
Selected transactions: Natron Hayat Maglaj

Signed in 2006

Kastamonu Entegre (KEAS), the leading Turkish producer of MDF
and chipboard, took a majority stake in Natron Hayat D.O.O
through privatisation

One of the largest FDI in Bosnia and Herzegovina (EUR 65 million)

Investment in rehab and environmental and energy efficiency
improvements of the mill

EBRD provided EUR 11million loan alongside additional financing
of EUR 38 million from other international and local commercial
banks and ECAs

EBRD is considering additional financing in the light of long term
partnership
4. Agribusiness in BiH
EBRD and Agribusiness
Agribusiness
• The EBRD has invested over EUR 5
billion in over 340 projects in the
Agribusiness sector.
• 2009: 59 projects signed with EUR 639
million committed investments.
• One of the largest sector teams within the
EBRD with 32 bankers in London and
Resident Offices accounting for around
40% of the projects in the EBRD’s
corporate sector portfolio.
• Client network of leading global and
regional players.
• Indirect support to smaller farmers and
food enterprises via SME credit lines.
Agribusiness Strategy
Downstream
Agricultural
inputs
& production
Upstream
Primary &
secondary
processing
Packaging &
distribution
Retail &
Food Service
• All activities along the food and drink production
chain are included and rather focused on
increasing demand than supply.
• Vertical approach addresses specific risks and
features attached to agribusiness ventures.
• Downstream investments are mainly in vertical
integrated companies with positive spill-over
effects to primary agriculture.
• As a result, EBRD has a conservative approach
towards direct land investments.
Important to maximise supply potential and identify
bottlenecks along the entire food value chain
Investments along the value chain
Consumer
Distribution
Foodservice
Seeds
Farm Machinery
Agricultural
Chemicals
Bio-tech
Distributors/
Services
Agricultural
Inputs
Grains
Oilseeds
Livestock
Dairy
Fish
Production
Edible oil
Millers
Malters
Grain Handling
Primary
Processing
Packaging
Production
Food
Processors
Glass Bottles/
Jars
PET Bottles
Cans
Carton Containers
Meats/Poultry
Baked Goods
Confectionery/
Snacks
Beverages/Beer/Water
Dairy/UHT/Cheeses
Frozen Foods
Fish
Pet Food
Food retailers
Distributors
Caterers
Wholesale Markets
EBRD and Agribusiness: sector views
Potential responses

Developing appropriate strategies in dealing with market challenges

Retail consolidation is happening but competition is healthy: higher
competition in retail will create larger choices for suppliers and
consumers.

Regional expansion: higher growth opportunities in western Balkan
countries including higher brand recognition then in the EU as well as
understanding of consumer preferences – establishing early entrance
– subsidiaries or JV.
Strong processors are the key to a healthy sector; as they provide a
sustainable market for agricultural products. A better legal and
institutional framework is a must for farmers and processors to get the
financing they need – e.g. introduction of warehouse receipts
financing.

EBRD and Agribusiness: sector views
Recognised strategies of sub-sectors

Branded food and beverages producers with clear regional
expansion strategies
-

Growing local and international retailers
-

Projects with: Vitaminka (FYR Macedonia), Tikves (FYR Macedonia), Zdravje
Radovo (FYR Macedonia), Vitalia (FYR Macedonia) Marbo (Serbia), Grand (Serbia),
Droga Kolinska (Slovenia), Stark (Serbia) Agrokor (Croatia), Dukat (Croatia)
Projects with Idea (Serbia), VF Komerc (Bosnia and Herzegovina), Kaufland
(regional), Billa (regional)
Processors such as edible oil, meat producers
- Projects with Victoria (Serbia), Boni (Bulgaria), Bimal (Bosnia and Herzegovina)

And most recently – Investments
Ukraine)
in primary agriculture (Agroinvest,
Selected transactions: Konzum d.o.o. Sarajevo

Signed in 2009

Konzum d.o.o. Sarajevo,fully owned by
Konzum d.d. Croatia which is a subsidiary of
Agrokor, the leading producer and distributor
of food and beverage products and one of
the leading retailers in the South Eastern
Europe.

EBRD provided EUR 25 million loan
alongside additional financing of EUR 25
million from other participating banks to
support the expansion of the company’s
retail network in BiH and the financial
restructuring.
Selected transactions: BIMAL Brcko

BIMAL is the only edible oil
producer in BiH with sales of EUR
50 million in 2009.

2008: the Bank provided EUR 6
million financing for agri commodity
financing.

2009: EUR 4m for permanent
working capital financing.

Strong presence in the region,
including exports to the EU.
5. Financing with EBRD – financial
instruments and available programmes
The EBRD offers a variety of different
financing instruments
Loans
Equity

Senior, subordinated,
convertible

Common / preferred
shares

Long term

Mezzanine financing

Working capital


Fixed / floating interest
rates
Exclusively minority
participations (up to
35%)

Major (USD, EUR) and
local currencies (e.g.
Romania, Russia,
Poland)

Political risk guarantees

“Portage Equity“
Syndication

In-house syndication
unit

Lender of record

EBRD‘s Preferred
creditor status attracts
other financiers
EBRD financing requires a clear investment
strategy
Necessary Information

Provide EBRD with an overview of proposed investment
including:

Short history and company description

Financial statements (balance sheet, income statement, cash
flow) for the last 3 years

Business plan (project description)

Financial projections (balance sheet, income statement, cash
flow) for the next 5 years
Special available programmes
Western Balkans Local Enterprise
Facility (WB LEF


Eligible investments: expansion,
restructuring or acquisitions of
existing private businesses
Eligible sectors: wide range of
sectors (exceptions weapons,
liquors and tobacco).
Western Balkans Sustainable
Energy Direct Financing Facility
(WBSEDFF)

Eligible investments : industrial
energy efficiency and small
renewable energy projects

Eligible companies : local
privately-owned companies. In the
case of renewable energy projects
operated under a concession
arrangement, the concession has
to be acquired in a competitive
tender.

Size of investments: Individual
investment range from € 1 million
to € 10 million

Target Stake: in the range of 20 to
35% of the capital of the company

Time horizon: a period of 3 to up
to 8 years
Size of investments : Loans range
from €1 million to €6 million

Time horizon: up to 12 years

Special available programmes
EBRD - Italy LEF



Established jointly by the EBRD and the Italian Government in
2006
€170 million of capital provided jointly by the EBRD (€150 million)
and the Italian government (€20 million)
A team of dedicated bankers and advisors in EBRD’s offices in
Belgrade, Podgorica, Pristina, Istanbul, Sarajevo, Skopje, Tirana
and Zagreb

Supported by Technical Cooperation funds for project
development, pre- and post-investment technical assistance

Streamlined investment approval process (carried by EBRD in
London)
Special available programmes
Local Enterprise Facility LEF

A delegated facility for equity and quasi-equity investments, as well as tailor-made debt
financing

To meet the growing financing needs of dynamic local enterprises, not sufficiently
supported by other financing sources

WB LEF operates on a strictly commercial basis, seeking returns commensurate to
underlying risks.

Objectives:
– Enhancing competitiveness and product quality: strengthening market
competitiveness and improving the quality of goods and services provided
– Restructuring: 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

Supported by Technical Cooperation funds for project development, pre- and postinvestment technical assistance
Special available programmes
Eligible for investments under LEF

Eligible investments: expansion, restructuring or acquisitions of
existing private businesses

Eligible sectors: a wide range of sectors, with only few exceptions
(weapons, liquors and tobacco). All investments must be in line
with sound environmental principles

Size of investments: LEF individual investment could amount to
up to EUR 10 million

Target Stake: (preferably) in the range of 20 to 35% of the capital
of the company

Time horizon: a period of 3 to up to 8 years
Special available programmes
WeBSEDFF

Senior (secured) loans and project financing arrangements in the amount of EUR 1 million to
EUR 6 million EBRD financing

For greenfield projects EBRD can provide financing of up to 35% of the total project
costs

Average (expected) maturity of 6-8 years for energy efficiency and 10-12 years for
renewable energy projects, with appropriate grace periods and flexible repayment
schedules

Supported by TC funds for project identification and preparation

Incentive payments based on the estimated CO2 emission reductions generated by each
eligible project (capped at 15-20% of the loan principal levels)

Technical criteria - At least 20 percent of energy savings for industrial energy efficiency
projects and minimum efficiency (utilization) rate for renewable energy projects;


Financial criteria – sound financial / economic structure and sufficient equity capital
contributed to the project by the Sponsor
Interest rates: market based, depending on the type and risk profile of the project, the
Sponsor and other considerations
Special available programmes
TAM/BAS

Technical assistance for SMEs
– Turnaround Management supports transfer of know-how
and consulting in medium to large-sized privately owned BiH
companies
– Business Advisory Service provides grants for qualifying
SMEs to address issues related to their development with
the help of local consultants

Donor-funded Programmes managed by the EBRD

30 offices in 18 countries of CEE, Caucasus and Central Asia
Special available programmes
TAM – Turnaround management

Supports transfer of know-how and consulting in medium to
large-sized privately owned BiH companies

Consultants (Senior Industrial Advisors) spend up to 18 months
in company and work on turnaround, restructuring and change
management


TAM SIAs – Currently over 2,000 in EBRD database; Highly
competitive experts with minimum 15 years of managerial
experience in a particular industry
Service is free of charge for companies, total cost for the
Programme is €50-70,000 (paid directly to SIAs)
Special available programmes
BAS – Business Advisory Service

Provides grants for qualifying SMEs to address issues related
to their development with the help of local consultants

Eligible companies have to have 10-250 employees, be at least
two years on the market, private and locally owned

Grants are maximum 50% of the total net value of consulting
service, but do not exceed €10,000

97% of all projects evaluated one year after disbursement are
rated successful or highly successful
EBRD Sarajevo – Contact details
Giulio Moreno, Senior Banker
Rijad Hasic
Head of Office
Principal Banker
E-mail: [email protected]
E-mail: [email protected]
Tamir Mostarac
Roberto Ippolito
Principal Banker
Principal Banker
E-mail: [email protected]
E-mail: [email protected]
Ines Cebic
EBRD Sarajevo Resident Office
LEF Analyst
Sarajevo RO, Fra Andjela Zvizdovica
br 1, B 15
E-mail: [email protected]
Tel.: 033 667 945 Fax: 033 667 950
EBRD Regional Contacts
Vedrana Jelušić-Kašić
Milen Georgiev
Senior Banker
Senior Banker
Agribusiness Team
Manufacturing and Services Team
Zagreb RO, Miramarska 23/III
Belgrade RO, Bulevar Zorana
Đinđića 64a/V
Tel.: +385 1 6000 310
Fax: +385 1 6197 218
E-mail: [email protected]
Tel.:+381 11 212 0529
Fax: +381 11 212 0534
Email: [email protected]

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