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| Home Center |
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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 | 26462 |
| Company name | Home Center Ltd. |
| Country |
| Russian Federation |  |
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| Sector | Retail (Including Supermarkets, Grocery Stores, etc.) |
| Environmental category | B |
| Department | Reg Manufact, Agri & Services, EMENA |
| Status | Active |
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| Date SPI disclosed | February 20, 2008 |
| Projected board date | March 21, 2008 |
| Previous Events | Invested: August 21, 2008
Signed: May 22, 2008
Approved: May 9, 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 |
The project comprises the greenfield development of a chain of do-it-yourself (DIY) stores in Russia by Home Centers Ltd. (HC Russia or the company), a Russian limited liability company fully controlled by Israel’s leading DIY company, Home Center (DIY) Ltd. (HC Israel or the sponsor). The project comprises HC Russia’s investments during 2005-2010 and will include:
- the setting up of the company’s headquarters and all the necessary support systems needed for the Russia-wide development of a DIY chain;
- the equipping and placing into operation of 16 project stores with the aggregate net sales area of approximately 160,000 square meters to be open before the end of 2010; and
- maintenance and working capital investments. |
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| Project sponsor and major shareholders of project company |
| The sponsor is Home Center (DIY) Ltd., Israel’s leading chain of DIY and domestic merchandize stores. In addition to its home market, Home Center is present in Cyprus and Serbia. The sponsor is fully beneficially owned by the family of Mr. Eliezer Fishman, a prominent Israeli entrepreneur. |
| Total project cost and amount and nature of IFC's investment |
| The total cost of the project is estimated at approximately $138.5 million. The proposed IFC investment is expected to consist of a $67 million loan package, which will include A, B and C loans. |
| Location of project and description of site |
| The project entails opening of 16 stores in leased premises within shopping malls in the Russian cities of (in the order of the anticipated store opening) Yaroslavl, Krasnodar, Orenburg, Chelyabinsk, Naberezhnye Chelny, Izhevsk, Moscow, Kazan, Lipetsk, St. Petersburg, Saratov, Barnaul, Novosibirsk, Penza and Nizhniy Novgorod, as well as the establishment of the company’s headquarters in Moscow. |
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| Anticipated development impact of the project |
The project is expected to have the following key development impacts:
- Modern retail format in regions:
The company’s strategy to expand its retail stores outside Moscow will bring modern, efficient retail formats to cities where such formats are underrepresented or non-existent.
- Increased local supply linkages:
The project will generate both downstream and upstream local supply linkages. It will create business opportunities to local suppliers and also provide necessary inputs to the housing and construction sectors.
- Providing consumers with a wide range of quality products at an affordable price:
Consumers will have improved access to convenience of high quality shopping, with a wide range of quality products and services at affordable prices. By selling a wide range of products and by opening a significant number of stores, the company is expected to benefit from economies of scale. This will enable the company to pass on larger discounts to the consumers.
- Increased employment:
The project is expected to create permanent employment for over 5,000 people. It will also create significant temporary employment during construction as well as indirect employment in the transportation and delivery sectors. |
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| IFC's expected development contribution |
- Risk Mitigation:
IFC’s expertise in the retail sector will be important in assessing feasibility of this large-scale greenfield project in an underserved market in Russia. Also, IFC’s financial structuring expertise will be important to make the project bankable.
- Resource Mobilization:
IFC is expected to mobilize additional financing through B-Loan syndication, attracting commercial bank financing with longer tenors currently unavailable to the company in Russia.
In addition, IFC’s presence in this transaction will help broaden the visibility of Home Center as a regional retail player, which will in turn facilitate its access to financial markets in the future. |
| Environmental and social issues - Category B |
Home Center is a category B project according to IFC's environmental and social review procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS). The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that the client will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards.
The main environmental and social aspects of the proposed project are:
- environmental, health and safety management of growing HC chain in Russia, opportunities for water and energy conservation and efficiency;
- waste minimization, recycling and safe disposal; and
- life and fire safety.
The ESAP contains actions HC Russia has committed to such as:
- commissioning a manager for environmental, health and safety affairs;
- developing environmental, health and safety management systems;
- independent review of Life and Fire Safety Master Plan and existing facilities, and corrective action plan, as necessary. |
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| For inquiries about the project, contact: |
Igor Mariash, CEO
HC Russia’s Headquarters
Building 9, 38A 2-ya Khutorskaya Street
Moscow, Russia 127287
Fax: +7 (495) 685-9559
Website: www.homecenters.ru |
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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 documents will be made available at the HC Russia's Headquarters. Please see the address details above. |
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