Azerigazbank (AGB) Equity

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Azerigazbank (AGB or the Bank) is one of leading private banks in Azerbaijan providing financing and other banking services to Small and Medium Enterprises (“SMEs”), local entrepreneurs and individuals. In July 2005, the Bank was ranked number two among private banks in terms of assets, number five in terms of loan portfolio, and number two in terms of deposits. In addition to its head office in Baku, AGB has 8 branches throughout Azerbaijan. AGB has been IFC’s client since 1998 when the Bank borrowed $400 thousand for on-lending to SMEs. Following the Bank’s growth and increasing role in the SMEs sector, IFC extended a second loan to the Bank in 2003 in the amount of $1.2 million of which $1.0 million is outstanding today. By providing long term funding and technical assistance to AGB, IFC supported the Bank to grow as solid and trustworthy institution.As AGB continues to expand its lending and leasing operations, the Bank approached IFC with a request for to participate in the upcoming equity issue which would raise the capital of the Bank to AZN12 billion. IFC is considering an equity investment into AGB representing about 17.5% of common voting shares of the Bank. The new project is a part of investment package which beside the equity investment includes a senior loan of up to $3.0 million and a Trade Finance line of up to $1.0 million. The long term funding would allow the Bank to strengthen its balance sheet in view of the expected expansion and increased demand for funding from SMEs, entrepreneurs and individuals. The investment will be supplemented by technical assistance to contribute to the institutional capacity building of the Bank and improve such areas as corporate governance, risk management and internal audit.