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| Summary of Project Information (SPI) |
| This Summary of Project Information 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. |
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| Project number | 24421 |
| Project name | TBC IV |
| Country | Georgia |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | TBC Bank |
| Environmental category | FI-2 |
| Date SPI disclosed | July 5, 2005 |
| Projected board date | August 4, 2005 |
| Date revised SPI disclosed | October 13, 2005 |
| Status | Active |
| Previous Events | Invested: November 30, 2005
Signed: November 28, 2005
Approved: November 28, 2005 |
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| Description of company and purpose of project |
The project is to purchase approximately 21.7% of TBC Bank’s shares (the “Bank”) from Messrs Badri Japaridze and Mamuka Khazaradaze, the founding shareholders of the Bank (the “Georgian Shareholders”), for up to US$8.5 million. IFC will retain 3.1% of the Bank’s shares for its long term holdings and will grant the Georgian Shareholders an option to repurchase the remainder of the shares over a 4 year time period. The project will increase IFC’s direct shareholding in the Bank and will enable the Georgian Shareholders to purchase additional shares from a financial investor which has chosen to exit the Bank.
The purpose of the project is to consolidate the shareholding structure of the Bank, thus positioning the institution for growth through a possible future alliance with potential strategic investors. The opportunity for consolidation has arisen as a result of the recent exit of a financial investor from the Bank’s shareholding. IFC’s share purchase and will enable the Bank to give serious consideration to building alliances with strong strategic players. This strategy, when fully implemented, would provide the Bank with (a) expertise and know-how in offering the Georgian public new banking products, and (b) access to capital to support the Bank’s growth.
TBC Bank, is the largest bank in Georgia, holding 25% of the country’s banking assets and 34% of deposits. TBC Bank was established on December 17, 1992 and provides a wide range of retail and corporate banking services. In recent years, TBC Bank has emerged as a leader in the Georgian banking sector and has been key in restoring the public’s confidence in the banking sector. Banks are the primary financial intermediaries in Georgia and play a significant and increasing role in financing economic growth. |
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| Project sponsor and major shareholders of project company |
| "The project’s sponsors and founding shareholders are several local Georgian businessmen, the more prominent of whom include Mr. Mamuka Khazaradze and Mr. Badri Japaridze. Messrs Khazaradze and Japaridze currently directly or indirectly own or control a 71% stake in the Bank. After the proposed transaction, Messrs. Khazaradze and Japaridze will own or control just over a 50% stake. Other major shareholders of TBC Bank include DEG (10%) and IFC (9%)". |
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| Total project cost and proposed IFC investment |
| The total project cost will be approximately $8.5 million in the form of an equity investment. |
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| Location of project and description of site |
| TBC Bank is headquartered in Tbilisi, Georgia with 11 branches all but six of which are located in this city. |
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| Project Development Impact and IFC's Role |
The expected development impact of this project is high, because it achieves the following objectives in a frontier country:
Allow for consolidation of the shareholding structure of TBC Bank so as to enable the existing shareholders to be in a position to offer a significant stake to potential strategic investors in the future. Participation of a strategic investor in the Bank’s shareholding structure will enable the Bank to offer new banking products and know-how to Georgia. In particular, IFC is hopeful that a strategic investor with a global banking presence can be attracted. Currently, only regional players have begun to enter the Georgian market.
IFC role will assist the largest bank in the country to consolidate its shareholding position in preparation for possible alliance with potential strategic investors. The proposed investment is consistent with IFC’s strategy to support the growth of Georgia’s economy, particularly smaller businesses, by strengthening the financial sector. IFC is one of the Bank’s first partners and is supporting the Bank in managing the exit of a more recent shareholder. |
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| Environmental and social issues - Category FI-2 |
This is a category FI Type 2 project according to IFC's environmental and social review procedure. Under IFC's previous investments in TBC, the Bank has established an environmental management system (EMS) to ensure that investments are consistent with applicable Georgian and IFC/World Bank environmental requirements and exclusion list, and has been submitting annual environmental performance reports to IFC's satisfaction. For the duration of this new investment, TBC will be required to maintain its EMS and continue to provide annual environmental reports.
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| To contact the project company, please write to: |
Zezva Tsiskarishvili
zezva@tbcbank.com.ge |
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