Working with the European Bank for Reconstruction and Development - - PowerPoint PPT Presentation

Working with the European Bank for Reconstruction and Development

Matti Hyyrynen 15th March 2018

EBRD Introduction

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EU 28 Countries1 63% EBRD region excluding EU 7% Others 11% USA 10% Japan 9%

Shareholding structure

• 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%

An international financial institution supporting the development of sustainable well-functioning market economies

Highest credit rating (AAA/Aaa) Owned by 66 countries and 2 inter-governmental institutions (the EU and EIB)

Capital base of €30 billion

1991 Established 1992 Russia and 11 other

members of the former Soviet Union join

2007 The Czech Republic

becomes the first country to “graduate” from the EBRD

2012 Starts investing in Egypt,

Jordan, Morocco and Tunisia

2016 25th anniversary;

China becomes 67th member

2017 Lebanon and the West

Bank and Gaza become countries of operations

EBRD introduction – option 2 IFI with a private sector mandate

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25 years of supporting companies in Central and Eastern Europe

Notes:

1 Total number of staff includes regular and fixed term employees, but excludes the President and Vice Presidents, Board members and externally funded positions. Data as of 31 December 2016

History

AAA-rated International Financial Institution founded in 1991 to meet the challenge of rebuilding the post-communist economies of Central and Eastern Europe

Mission

Foster the transition towards market-oriented economies and to promote private initiatives in countries committed to the principles of democracy

Core values

Investments must meet strict environmental, social, governance and integrity standards, supporting sustainable development and transparency

Shareholders

Includes 65 countries from the Central and Eastern Europe and Southern and Eastern Mediterranean regions, EU member states, G7 members, as well as EIB and EU. China has become the latest shareholder of the Bank in December 2015

Client sectors

All key economic sectors including financial institutions, infrastructure, energy and the general corporate sector, including agribusiness and ICT

Instruments

Long-term market based debt and growth equity financing and technical assistance

Staff

Over 1,900 employees from all member countries, working in sector, product, regional, support and control functions, including about 30% staff in Countries of Operations1

Locations

Headquarters in London, with 43 resident offices in its 36 countries of operations in Central and Eastern Europe, Central Asia and the Southern and Eastern Mediterranean region

EBRD Basic Principles

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Additionality Sound Banking Transaction Impact

Green Resilient Integrated

Our Transition Qualities

Competitive Inclusive Well- governed

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Russia Kazakhstan Mongolia —Kyrgyz Republic —Tajikistan —Moldova —Jordan Azerbaijan —Morocco Belarus Ukraine —Romania —Serbia —Kosovo Georgia— Armenia— Tunisia— Croatia— Bosnia and Herzegovina— Montenegro— Albania— FYR Macedonia —Turkmenistan —Bulgaria Estonia— Latvia— Lithuania— Poland Slovenia— Czech Republic— —Slovakia —Hungary Uzbekistan— Egypt— Greece Cyprus Turkey

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Where we invest Increasing footprint

Central Eastern Europe SEMED Western Balkans Turkey Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine Central Asia (incl. Mongolia) Cyprus, Greece West Bank and Gaza Lebanon

—Lebanon West Bank & Gaza—

EBRD Largest investor in the region

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Since 1991, EBRD invested

• ver €119 billion in around

5,035 projects In 2017

€9.6

billion

412

projects EBRD Top 10 investee countries in 2017 (€m)

Private sector accounted for share of

71%

Debt

88%

Equity

5%

Guarantee

7%

6,9 8,5 8,2 8,7 8,5 1,2 1,0 1,4 0,7 0,4

• 10

10 30 50 70 90 110 130 2 4 6 8 10 12 2013 2014 2015 2016 2017

Net c cumulat lative B Bank Investment Annual b al business investment (ABI)

Equity ABI Debt ABI (and guarantees) Net Cumulative Bank Investment

1 Turkey 1,540 2 Egypt 1,413 3 Ukraine 740 4 Poland 659 5 Greece 614 6 Kazakhstan 586 7 Romania 546 8 Azerbaijan 456 9 Serbia 382 10 Tunisia 324

Note: unaudited as at 31 December 2017

Portfolio distribution by sector and region

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EBRD Portfolio (at 31 December 2017): € 41,435 million Sector Region

10% 3% 14% 18% 7% 19% 12% 18% Ce Central al A Asia 1 ia 10% Centra ral E l Europ rope & & B Balt ltics 3 3% Cypru rus & & G Gre reece 1 14% Eas astern E Europe & & Cau Caucas asus 1 18% Russi ssia 7 7% Sou

• uth-E

h-Eastern rn E Europ rope 1 19% Sou

• uthe

hern rn E Eastern rn Me Mediterra rranean 1 12% Turkey key 1 18% 22 % 22 % 25 % 25 % 29 % 29 % 24 24 % % Fin inan ancial ial I Instit itutio ions 2 22% ( (Deposit itory c credit dit ( (banks), Leas asin ing f fin inan ance, n non-de deposit itory c credit dit ( (non-ban ank), In Insura rance, P , Pension

• n, Mu

, Mutual F l Funds) Corp

• rpora
• rate 2

25% ( % (Ma Manufa facturi ring/Seri rivc vces, Agrib ibusin iness, E Equit ity f funds ds, Pr Property & & T Touris ism, Informat atio ion & & Co Communic icatio ion technology) In Infra frastru ructure re 2 29% ( % (Mu Municipal & l & E Envi viron ronmental infra frastru ructure re, T , Tra ransport

• rt)

Note: unaudited as at 31 December 2017

Projects in all key business sectors

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Telecomms, Informatics & Media Property & Tourism

Industry, Commerce & Agribusiness

Transport

Municipal & Environmental Infrastructure

Financial Institutions

Natural Resources

Power & Energy

Manufacturing & Services

Working Together Approval process and due diligence

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Co Concept R Revie iew Stru ructure re Review Fin inal R Revie iew Bo Board A Appr pproval Signi ning ng Due Diligence & Term Sheet negotiation Final Documentation & Public Disclosure

Our approval process EBRD Due Diligence Process

Technical

• Environ. &

Social Financial Market Legal & Contracts

• Feasibility study
• Completion risk
• Production capacity
• Air / water pollution
• Discharge
• Health & Safety
• Communities /

Stakeholders

• Historical financials
• Projections
• Financial Model
• Supply-demand
• Competitive

analysis

• Security
• Incorporation and

Domiciliation

• Ownership and title
• Reserves report
• Management
• Energy Audits
• Management systems
• ESAP / Gap Analysis
• Equal Opportunities /

Inclusion

• Credit Ratios (debt)
• Valuation (equity)
• Price risk
• FX risk
• Licenses, permits
• Legal agreements
• Insurance

The EBRD Its key strengths and objectives

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Key strengths Objectives

Long-term perspective Commercial basis Regional integration Policy dialogue Work with governments and shareholders 25 years experience Local presence in 36 countries Structuring expertise Catalyst to mobilise finance for both private and public sector clients Invest both in the private and state sectors Commercial basis Improve people's lives Private sector development Innovate Foreign direct investment

EBRD working with commercial investors

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does not compete with commercial investors invites other banks to participate in its operations leads the market with innovative products and longer tenors employs donor grant funds to blend with its projects cooperates with other investors (supporting strategic equity investors) investment of €1 “mobilises” another €3 for the project provides assistance in structuring and executing investments with significant energy and resources efficiency gains does not lend or invest when commercial banks or private investors can do it alone

The EBRD

Working with the EBRD

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Investment

Trade facilitation

Procurement

Policy dialogue

EBRD Product Flexibility tailored to project needs

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Exact terms depend on specific needs and market conditions

Typical size Term Approach Currency Structures Applications

5-7 years (up to 10-15 years in case of infrastructure investments) €10mln + (less in less advanced countries) Finance up to 35% of the project (60% with syndication) Major foreign currencies as well as local currency Typically from 3-7 years €5-7mln + (less in less advanced countries) Typically €50k – €50mln 1.5-2 (up to 3) years Mainly through Trade Facilitation Programme

• Senior, subordinated or

convertible,

• Project finance
• Floating or fixed rates
• Portage equity finance
• Risk equity
• Import/export operations
• Pure guarantees, cash advance

trade finance Minority stake

• Greenfield/Brownfield, JVs,
• Capex for expansion/modernization, including resource

efficiency improvements

• Ownership change: acquisition, consolidation, privatisation
• PPPs, etc.
• Issues to international banks
• Takes the risk of transactions
• f the banks in the EBRD’s

countries of operations

Debt Equity Guarantees

EBRD financing instruments

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Loans Equity

Senior, subordinated, convertible Floating/Fixed rates Long term (up to 10y or more) or short term revolving Choice of currencies (€, US$, EGP) Common stock or preferred Minority position only (up to 35%) Mezzanine debt Technical Cooperation EBRD has a strong track record to mobilize grant monies to support technical assistance to its projects Other Guarantees, currency swaps, trade facilitation programme etc.

What the EBRD can finance

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What we finance

Projects may be considered for EBRD assistance if they: are located in an country where the EBRD works are bankable projects have significant equity contributions in cash or in kind from the project sponsor would benefit the local economy satisfy the EBRDs environmental standards as well as those of the host country

STOP!

Defence-related activities Tobacco industry Substances banned by international law Gambling facilities Environmental harmful projects (or if adverse impact cannot be adequately mitigated)

Growth opportunities in the EBRD region

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Growth

• pportunities

Consumer Industries Infrastructure and Energy Knowledge Economy Market Liberalisation Financial Intermediation Regional Consolidation