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| Megalogix Novosibirsk |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 27379 |
| Company name | Logopark Ob Ltd |
| Country | Russian Federation |
| Sector | Construction and Real Estate |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Active |
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| Date SPI disclosed | July 15, 2008 |
| Projected board date | August 19, 2008 |
| Previous Events | Invested: October 9, 2008
Signed: August 26, 2008
Approved: August 21, 2008 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Megalogix Ltd. (Megalogix) is a company established to develop an integrated network of class A warehouses in up to 20 cities across Russia and major cities of CIS. Megalogix is a 50/50 joint venture of:
- Raven Russia Limited (Raven), a sponsor of an existing IFC client in Ukraine, CJSC Logistics Center Kalyinivka, and
- Avalon Group (Avalon), one of the leading Russian distributors of fast-moving consumer goods (FMCG). The proposed investment is part of the above mentioned large scale initiative of Megalogix and involves the construction of a class A warehouse facility of approximately 103,000 square meters (m²) in the south of Novosibirsk.
Novosibirsk is a frontier region of Russia with income per capita of less than half of national average and suffering from severe shortage of warehousing capacity. The project will be implemented through a 100% subsidiary of Megalogix (Logopark Ob or the borrower) in Russia, incorporated solely for the purpose of the project implementation. The project will address the undersupply of quality warehouse space in Novosibirsk and is part of the Megalogix’s overall strategy to become one of the leading warehousing service providers in Russia. |
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| Project sponsor and major shareholders of project company |
The sponsors of the project are Raven Russia Limited (Raven) and Avalon Group (Avalon). Avalon was founded in 1991 and is currently owned by two Russian entrepreneurs. In addition to partnership with Raven in Megalogix, Avalon has also joint-ventured with Raven in Avalon Logistics, a leading provider of logistics and distribution services in Russia.
Raven was founded in 2005 and is a publicly traded real estate fund specializing in development of management of commercial warehouses in Russia. The company currently owns/manages several warehousing projects in Russia and one in Ukraine. Raven is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. |
| Total project cost and amount and nature of IFC's investment |
| The estimated cost of the project is approximately $150 million. IFC is considering a $35 million A loan and a $5 million C loan for IFC’s own account, and a syndicated $55 million B loan to the borrower. |
| Location of project and description of site |
| The site for Logopark Ob is located in the south of Novosibirsk close to M51 highway, which connects the city with Moscow, and is less than three km away from the city trading and commercial zone. |
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| Anticipated development impact of the project |
| The project would contribute to the increase in availability of modern warehousing services in Russia. Access to quality services will help lower overhead costs for both suppliers and retailers of fast-moving consumer goods. In addition, the project will directly and indirectly create more than 1000 new jobs. |
| IFC's expected development contribution |
By providing long-term debt financing for a real estate development project in a frontier region, IFC is addressing the difficulties of raising debt given both the project location and the present market conditions. Thus, the proposed financing will enable the sponsors to proceed with their capital-intensive investment program.
In addition, IFC’s role as a long term partner of Megalogix is to help the company in mobilizing capital from international lenders through a proposed B Loan, improving the company's access to finance and demonstrating to foreign investors the potential for investments in relatively poorer regions of Russia. |
| Environmental and social issues - Category B |
This is a category B project according to IFC’s environmental and social review procedure. Such category was assigned due to limited potential environmental and social adverse impacts, which can be duly minimized or eliminated. The key environmental and social issue associated with the Megalogix’s facility is the capacity of the company to manage environmental and social performance of third parties, including construction contractors and future tenants of the logistic centre, namely:
- construction impacts;
- increased traffic;
- air emissions from boiler and back-up diesel generator;
- solid waste management and disposal;
- hazardous materials management;
- occupational health and safety. |
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| For inquiries about the project, contact: |
Ms. Ariana Myers, Director, Finance and Development
Megalogix Ltd.
21 Knightsbridge, London, UK
Telephone: +44 20 7235 0422
Fax: + 44 20 7235 0455 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
Logopark Ob
26 Krylova Str., Office #508
Novosibirsk 630091
Russia |
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