Norum Russia Fund III LP

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	25573
Company name	Norum Russia Fund III LP
Country	Russian Federation
Sector	Collective Investment Vehicles
Environmental category	FI
Department	Private Equity and Investment Funds
Status	Active

Date SPI disclosed	December 22, 2006
Projected board date	February 15, 2007
Previous Events	Invested: October 18, 2007 Signed: June 26, 2007 Approved: April 12, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Norum Russia Fund III, L.P. (the Fund) is a Russia-focused private equity fund seeking €100-150 million in capital commitments to invest in fast-growing small and medium-sized companies that require expansion capital. The Fund will be managed by the same team that was operationally responsible for two EBRD-sponsored regional venture funds (covering North-West and Western Russia).

Anticipated development impact of the project

The Fund is expected to have several important impacts:

- Support the development and growth of local entrepreneurship and SMEs:

The Fund will provide equity financing and management expertise to a number of competitive and fast-growing SMEs and is expected to be a catalyst for the mobilization of further financing for its investee companies.

- Encourage regional economic development:

Norum will continue supporting companies, thereby stimulating employment and growth, outside the main centers of financial/economic activity.

- Improve business environment and support capacity building of companies:

The Fund will provide value added services aimed at improving corporate governance and implementing environmental and social standards, thereby transferring important skills to local entrepreneurs and creating the basis for sustainable economic development.

- Introduce and develop new financial products:

Private equity is an important source of external financing for fast-growing companies.

IFC's expected development contribution

- Catalytic role mobilizing foreign institutional and private capital.
- Providing input regarding fund structure and terms.
- Improving corporate governance and assisting in adoption of best practice corporate governance and environmental and social standards at the Fund and portfolio company level.

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 analyzed the Fund’s expected portfolio and sectors of investment and determined the Applicable Requirements based on an analysis of the potential social and environmental risks associated with the expected portfolio and considering IFC’s investment. The Applicable Requirements are:

- the IFC FI Exclusion List,
- the applicable National Social and Environmental Laws and regulations.

IFC also reviewed the Fund’s existing Social & Environmental Management System (SEMS) and capacity to implement the same.

Based on the Applicable Requirements and SEMS and capacity review, the Fund will be required to:

- Revise its existing SEMS prior to disbursement, to the satisfaction of IFC, to incorporate screening of investments against IFC's FI Exclusion List;
- Commit to implement the SEMS to ensure that its investments are in compliance with the Applicable Requirements;
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis;
- Submit a periodic report to IFC.

IFC PROJECTS