Uzbek Leasing 3

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	27246
Company name	Uzbek Leasing International A.O.
Country	Uzbekistan
Sector	Finance & Insurance
Environmental category	FI
Department	Global Financial Markets Group
Status	Pending Disbursement

Date SPI disclosed	July 2, 2008
Projected board date	August 4, 2008
Previous Events	Signed: August 18, 2008

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project is to provide a loan to Uzbek Leasing International A.O. (Uzbek Leasing or the company), an existing IFC client that has been providing medium term financial leases for industrial equipment and machinery. The company's clients are small and medium size private enterprises (SMEs), the growth of which is critical for the development of Uzbekistan's economy.

As of March 31, 2008 the company’s net investment in finance leases amounted to $9.5 million. Uzbek Leasing has profitable operations - in 2007 the Company secured return on average assets of 8.7% and return on average equity of 13.9%.

Prospects for developing a well-diversified leasing business in Uzbekistan are regarded as good, as demand has been strong both from SMEs and individual entrepreneurs. However, insufficient funding has been an obstacle to expand operations.

The loan will address the company’s critical need in funding to continue expanding its leasing portfolio to ensure its sustainability. International best practices that will be further implemented will help set standards in the country’s leasing industry and have a demonstration effect.

IFC would play an important developmental role by providing Uzbek Leasing with additional longer term resources for originating leases to SMEs so that the latter can implement investment plans and modernize existing facilities.

The new investment is processed under the IFC Azerbaijan-Central Asia Leasing Facility (ACALF).

Anticipated development impact of the project

The proposed project is expected to promote further private sector development in Uzbekistan through strengthening the leasing sector by helping develop key players in the sector and supporting private SMEs by providing much needed longer term financing in foreign currency to procure equipment.

IFC's expected development contribution

Longer term funding:

Through this proposed credit, IFC would play an important developmental role by providing Uzbek Leasing with additional longer term resources for originating leases for SMEs, thereby ensuring the company’s further growth, lease portfolio diversification and help it become a more sustainable institution while supporting the Uzbek private SME sector.

Catalyzing Growth of Leasing:

By providing term funding to enable Uzbek Leasing to expand its leasing operations, IFC is helping to catalyze the growth of the leasing sector that provides alternative funding and key to employment generation.

Promotion of Environmental and Social Standards of Excellence:

IFC being global leader for sustainable environmental and social practices, continues to be positioned well to help Uzbek Leasing develop further in this regard as part of the lease approval and supervision process, thereby catalyzing industry improvements in Uzbekistan.

Environmental and social issues - Category FI

As an existing IFC client Uzbek Leasing has developed social and environmental risk management guidelines. As this project is being reviewed under IFC's revised Environmental & Social (E&S) Review Procedure IFC will review theses guidelines and propose supplemental actions, if needed. Uzbek Leasing will be required to:

- Maintain or revise if needed its existing procedures prior to disbursement to ensure that all its investments are screened and processed to avoid supporting activities on the IFC FI exclusion list and to ensure that the use of the leased equipment complies with the applicable National laws;
- Continue to appoint qualified persons to manage and implement the procedure;
- Demonstrate commitment and resources to implementing the procedure ;
- When leasing to business activities with potentially significant environmental and social risks (e.g., mining, oil production), review E&S information available in the public domain and avoid leasing to businesses that have substantial unresolved environmental and social issues. In such cases, the company will also need to satisfy itself that the activity is being undertaken in compliance with the applicable national laws;
- Continue to submit a periodic report to IFC as per a format to be provided by IFC.

IFC PROJECTS