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| Megalogix Rostov |
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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 | 28578 |
| Company name | OOO Logopark Don |
| Country | Russian Federation |
| Sector | Transportation and Warehousing |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Active |
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| Date SPI disclosed | August 21, 2009 |
| Projected board date | September 23, 2009 |
| Previous Events | Invested: November 18, 2009
Signed: September 30, 2009
Approved: September 26, 2009 |
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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 |
The proposed project involves the refinancing and placing into full operation a newly constructed Class A warehousing facility of approximately 100,000 square meter (“sqm”) leasable space in the city of Rostov on Don (“Rostov”), Russian Federation. The project is being developed by Raven Russia Limited (“Raven Russia”), and implemented through Logopark Don LLC (“the Borrower”, “the Company”), set up in December 2006 as a [100%] greenfield subsidiary of Raven Russia.
Rostov, a frontier region of Russia with per capita income of less than half of national average, is faced with significant shortage of quality warehousing facilities in the medium term. The project will address the imbalance between demand and supply of quality warehouse space in the Rostov region, and is also aligned with Raven Russia’s overall strategy to consolidate its position as the leading warehousing service provider in Russia. |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Raven Russia Limited (“Raven Russia”), an existing IFC client. Raven Russia, founded in July 2005 and listed on the Alternative Investment Market (“AIM”) in London, is a well established Guernsey based property investment company. It invests in commercial real-estate, primarily warehouse space in Russia, and is the market leader in this segment. As of December 31, 2008, Raven Russia’s assets totaled approx. $900 million, including 390,500 sqm of income producing assets represented by eight completed warehouses, 655,500 sqm of assets under development, and a 463.5 hectares land bank. |
| Total project cost and amount and nature of IFC's investment |
The total project cost is estimated at $117 million and was partly financed by a two-year construction loan.
The proposed IFC financing package includes an A loan up to $20 million and a C loan up to $10 million for IFC’s own account, and a B loan up to $20 from syndicated banks. |
| Location of project and description of site |
| The project site, totaling approximately 46 hectares, is located in the north-east rural fringe of Rostov, on a greenfield site approximately eight kilometers from the Rostov airport and directly on the M-4 motorway which is the main regional arterial which leads ultimately to Moscow. |
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| Anticipated development impact of the project |
| The project will contribute to the increase in availability of modern warehousing services in Russia. Access to quality warehousing facility will help lower overhead costs for both suppliers and retailers of fast-moving consumer goods, which in turn will be passed on to the consumer in the form of lower prices. In addition, the project will create, directly and indirectly, more than 1000 new jobs. |
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| IFC's expected development contribution |
By providing long-term debt financing to a project based in a frontier region, IFC is addressing the difficulties of raising long-term loans in Russia, which is not readily available, especially given the current economic crisis. IFC will help the Company in mobilizing capital from international lenders through the proposed B Loan, thereby improving the Company's access to finance and demonstrating to foreign investors the potential for investments in relatively poorer regions of Russia.
IFC has worked with Raven Russia on two previous investments and this is the third project in a similar sector and region. The proposed financing will enable Raven Russia to proceed with its capital intensive program, and will support Raven Russia’s strategic objective as it expands and consolidates its position as the market leader in the sector. |
| Environmental and social issues - Category B |
This is a category B project according to IFC’s environmental and social review procedure. Such category was assigned due to limited potential environmental and social adverse impacts, which can be duly minimized or eliminated. The key environmental and social issue associated with Logopark’s facility is the capacity of the company to manage environmental and social performance of third parties, including construction contractors and future tenants of the logistic centre, namely:
- construction impacts;
- increased traffic;
- air emissions from boiler and back-up diesel generator;
- solid waste management and disposal;
- hazardous materials management;
- occupational health and safety. |
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| For inquiries about the project, contact: |
Toby Selman
Head of Structured Finance Development
Raven Russia Property Management
Phone: 7 495 644 4448
Fax |
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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 |
Logopark Don
Zakrutkina Street. d.67, k.315
Rostov on Don 344019
Russia |
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