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| Rakeen Georgia |
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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 | 26433 |
| Company name | Rakeen Georgia Ltd |
| Country | Georgia |
| Sector | Construction and Real Estate |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Pending Disbursement |
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| Date SPI disclosed | May 16, 2008 |
| Projected board date | June 19, 2008 |
| Previous Events | Signed: October 20, 2008
Approved: October 1, 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 |
| Rakeen Development PJSC (Rakeen), a real-estate development company based in Ras Al Khaimah (RAK) in the United Arab Emirates (UAE) is embarking on a diversification of its business operations with its first investment in Georgia. The project is to develop a mixed-used commercial property consisting of a shopping mall and two office towers, at an estimated cost of $255 million. The project will be located on a 7.3 ha site about 10 km from downtown Tbilisi, the capital city of Georgia. The project company to be established (Uptown Tbilisi) will sell each component of the project in a phased manner over a 4-5 year period. The proposed project in Georgia will be one of Rakeen’s first green field venture outside UAE and will address the growing local demand for quality property developments fuelled by Georgia’s strong economic performance in the past few years and rising income levels. The project is likely to be the first and largest mixed-use development in Georgia, and the development impact of quality business infrastructure (retail and office space) will be high. |
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| Project sponsor and major shareholders of project company |
The sponsor of the project is Rakeen who will own 100% of the project company. Rakeen is owned by:
- Reyada Investment Limited (46%), the private investment vehicle of Sheikh Saqr Al Qassimi, Ruler of the Emirate of RAK;
- RAK Properties (26%), a publicly listed UAE real estate developer with support from RAK government;
- RAK Airways (26%), UAE’s fourth largest airline privately owned by private UAE investors and RAK government; and
- the Government of RAK (2%). |
| Total project cost and amount and nature of IFC's investment |
The total project cost is estimated at $255 million. IFC’s proposed investment in the project company will consist of:
- $42 million A Loan for IFC’s own account;
- $85 million syndicated B Loan for the account of Participant Banks; and
- $7.6 million equity investment. |
| Location of project and description of site |
| The project will be located on a 7.3 ha site on David Aghmashenebeli Alley in the Digomi neighborhood about 10 km from downtown Tbilisi, the capital city of Georgia. The site enjoys a favorable location, on an arterial road that links Tbilisi with other cities in Georgia and the Caucasian region. This part of the city is developing fast but currently has low density villa and cottage type residential properties. There are few commercial developments comprising auto dealerships, gas filling stations and a large home furnishing store. Tbilisi’s largest (and so far only) hypermarket Goodwill is also located in this area as well as the US Embassy. The Swiss embassy will be locating nearby. |
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| Anticipated development impact of the project |
Project is expected to have the following development impacts:
- Demonstration Effect and Improved Access to Quality Infrastructure:
The project will be the first modern mixed-use development in Georgia offering quality shopping experience as well as the best Class A office space in Tbilisi. It will provide quality business infrastructure to the business community and attract companies seeking to establish their premises and work in a new neighborhood away from downtown Tbilisi. This is expected to help shape the appearance and functionality of the city and its attractiveness as domestic and regional commercial destination.
- Retail Sector Formalization:
The retail sector in Tbilisi is presently underdeveloped and fragmented. The shopping mall component of the project will be the first in Georgia constructed to international standards and will significantly improve the Georgian retail experience. It is expected to introduce more formalization in the sector and provide local consumers with greater choice of higher quality goods.
- Support to local construction sector:
The project will support the growth of the construction and related sectors generate (such as construction and construction products) and service firms (architects, engineers, brokers and surveyors). |
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| IFC's expected development contribution |
IFC’s expected development contribution will include:
- Long term financing:
IFC will provide long term financing suitable to property development which is not readily available locally.
- Resource mobilization:
IFC’s participation will encourage the mobilization of additional funding from external lenders that will allow the company to implement its development plan
- Support for South-South Investment:
IFC is supporting the UAE Sponsor replicate the success of their operations in Georgia. Rakeen values IFC’s country and sector knowledge in the region
- Promoting Sustainability:
IFC’s presence in this greenfield project will allow it to advise on sustainable practices, particularly by ensuring that the project meets World Bank/IFC environmental, health, safety and social standards, and promoting good environmental practices. |
| Environmental and social issues - Category B |
Since the potential adverse environmental and social impacts are limited in scope and can be mitigated by appropriate project design and management, this is a Category B project.
The key environmental and social issues are as follows:
- Social and environmental assessment and management
- Labor and working conditions
- Energy efficiency and emissions to air
- Waste management
- Discharges to water
- Community health and safety
- Sustainable natural resource management
- Protection of cultural heritage |
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| For inquiries about the project, contact: |
Mr. Zaza (Gela) Mikadze, General Director
Rakeen Georgia
2 Baratashvili Street 0105, Tbilisi, Georgia
Telephone: 995 32 933393
Fax: 995 32 933993
Cell: 995 99 575767
E-mail: mikadze@rakeen.ge |
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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 |
The Environmental and Social Review Summary of the project will be posted on the company’s website and made available to the local community at Rakeen’s offices in Tbilisi.
Information about other community engagement activities of Rakeen Georgia can be found at the company’s website:
http://www.rakeen.ge |
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