|
|  |
| 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. |
 | |
| Project number | 24264 |
| Project name | Aval II |
| Country | Ukraine |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Raiffeisen Bank Aval |
| Environmental category | FI-1 |
| Date SPI disclosed | May 13, 2005 |
| Projected board date | June 13, 2005 |
| Status | Active |
| Previous Events | Invested: August 8, 2005
Signed: July 19, 2005
Approved: June 30, 2005 |
|
| Description of company and purpose of project |
The proposed project is an equity / quasi-equity investment of up to $60 million in Aval Bank (Aval or the Bank) in Ukraine. Aval is an existing client of IFC. IFC committed a $15 million senior loan and $20 million subordinated loan (tier 2 capital) in December 2004, both of which were disbursed in February 2005 (IFC project ID number 22762).
With total assets in excess of $2.2 billion, Aval is the largest bank in Ukraine. The Bank has more than 1,400 branches and sub-branches, 12,000 corporate clients and 500,000 individual clients. It is one of the few leading banks without the support of an industrial oligarch, as it is controlled and majority owned by its management. Its leading position in the market makes it strategically important for the development of the Ukrainian banking sector.
IFC’s investment may be a convertible loan, to be converted into Aval common shares upon its acquisition by the strategic investor. |
|
| Project sponsor and major shareholders of project company |
| Aval was established in 1992 by Inkobank, the State Pension Fund, Oranta (the national insurer), and a few members of the current management board of the Bank, primarily the current President, Chairman and First Deputy Chairman of the Management Board. The institutional shareholders did not have the intention of staying in the Bank. Nonetheless, they supported Aval with the initial deposits from the pension system, the branch network of Inkobank, and other funds from Oranta as well as client base with Ukrotelecom, Post, and Customs. Currently Aval is majority owned by its management. |
|
| Total project cost and proposed IFC investment |
| The proposed IFC investment is an equity/quasi-equity investment of up to $60 million. |
|
| Location of project and description of site |
| The Bank is headquartered in Kiev and has more than 1,400 branches and sub-branches throughout the country. |
|
| Project Development Impact and IFC's Role |
| The project will have a very substantial development impact for Ukraine: First, the acquisition of the largest Ukrainian bank unaffiliated with any industrial oligarch by a strategic partner and IFC, and the resultant introduction of international best practices, would have a transforming effect on the Ukrainian banking sector. The project is likely to intensify the competition and upgrading the overall Ukrainian banking standards. Second, the confidence demonstrated by a strategic partner in investing such a large stake in a leading bank sends a strong positive signal to the international market, not only about the attractiveness of Ukrainian banking sector, but also that of the country as a destination for foreign direct investment. |
|
| Environmental and social issues - Category FI-1 |
This is a category FI type 1 project according to IFC's environmental and social review procedure. For IFC's previous investment in Aval, the Bank was required to establish an environmental management system (EMS) to ensure that activities financed under relevant operations are consistent with applicable environmental, occupational health and safety regulations of the Ukraine, designate appropriate individuals to have responsibility for the environment and to attend IFC's environmental management training, and submit to IFC annual environmental performance reports (AEPRs). For IFC's new investment in Aval, the Bank will be required to maintain an EMS satisfactory to IFC for the duration of the new investment. This will include submission by Aval of AEPRs to IFC, and environmental training for any new environmental officer designated by Aval.
|
|
| To contact the project company, please write to: |
Mr. Andriy Rozhok, Deputy Chairman
Phone: +380-44 490 8855
Fax: +380-44 490 8752 |
|
|
|