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| Aval Agro |
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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 | 27061 |
| Company name | Raiffeisen Bank Aval |
| Country | Ukraine |
| Sector | Agriculture and Forestry |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Hold |
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| Date SPI disclosed | July 3, 2008 |
| Projected board date | August 7, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The proposed project consists of a $50 million senior loan of up to 5 years to Open Joint Stock Company, Raiffeisen Bank Aval (Aval or the Bank), a 95.7%-owned subsidiary of Raiffeisen International Bank-Holding AG, for on-lending to farmers and small and midsize agribusiness companies engaged in primary agriculture and agricultural products processing in Ukraine. The project may include a syndication or parallel lending component, if appropriate. The primary objective of the project is to increase access to finance for Ukraine’s agricultural sector players. |
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| Project sponsor and major shareholders of project company |
| Aval is a 95.7%-owned subsidiary of Raiffesen International Bank-Holding AG, which was established in 2003 as the management holding company for the banking and leasing subsidiaries of Raiffeisen Zentralbank Österreich AG (“RZB”), operating in 16 countries in Central and Eastern Europe, Southeastern Europe and CIS (Russia, Ukraine and Belarus). RI is partly listed on the Vienna Stock Exchange with a free float of 31.5% (mostly institutional investors). RI is indirectly 68.5% owned by RZB, the central institution of the Raiffeisen Bankengruppe (“RBG”), Austria's largest and strongest banking group. RZB is Austria's third largest bank, with total assets of EUR 137.4 billion as of end-2007. |
| Total project cost and amount and nature of IFC's investment |
| The proposed investment by IFC consists of a US$50 million unsecured senior loan of up to 5 years to Raiffeisen Bank Aval. |
| Location of project and description of site |
| The Bank’s head office is in Kiev, Ukraine. The Bank has about 1,180 outlets in Ukraine. |
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| Anticipated development impact of the project |
| The project will provide dedicated agro-funding to one of Ukraine’s leading banks during a time of tight liquidity and will enable Aval to increase its agro-lending activities and products. The project will generate a range of social and economic benefits, including economic growth and higher productivity of the farming sector, and will enhance banking penetration in rural areas. |
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| IFC's expected development contribution |
| IFC is able to fill a financing void due to the tightening of credit markets in emerging countries, including Ukraine. Unavailability of long-term funding has traditionally been one of the critical issues limiting access to finance for farmers and smaller and medium-scale agricultural companies. In this context, IFC is providing long-term funding support and will therefore enable the Bank to expand its lending volumes and loan products to Ukraine’s agricultural sector. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will assess the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
- The IFC Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards
While the Bank is an existing IFC client, as this project will follow IFC’s revised Environmental and Social Review Procedure, IFC will review the capacity of the Bank to manage social and environmental risks and establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the Bank will be required to:
- Develop and, or upgrade, if necessary, any existing SEMS, prior to disbursement to the
satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities supported
by IFC financing are in compliance with the Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
Victoria Masna, Director
Financial Institutions Division
Raiffeisen Bank Aval
Tel/Fax: 380 44 230 23 44 |
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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 |
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