Coop Est

completed

The COOP-EST project entails the creation of a €30 million structured investment vehicle dedicated to providing senior and subordinated loans to micro and small businesses as well as to community-based projects in selected countries CEU region (Poland, Slovakia, the Czech republic, Hungary, the Baltic states, as well as countries of the former Yugoslavia). COOP-EST will be incorporated as a corporation under Belgian law. COOPEST aims to attract investments from cooperative banks and multilateral and social investors to reach, via multiple closings, a size of €30 million. The first closing is expected to be €15 million.COOP-EST will be set up as a three tier structured vehicle (the facility) comprised of three bond tranches, as per the following proposed characteristics: - Junior A notes for up to €6 million, representing 20% of the issue;- Mezzanine B notes for up to €9.0 million, representing 30% of the issue; and - Senior C notes for up to €15 million, representing 50% of the issue.The junior A notes will act as the first loss cushion and be fully subordinated to the B and C notes. The main sponsors (see below) will invest up to € 8 million in the project, subscribing to all the A bonds and smaller portions of the B and C bonds. It is proposed that IFC invest up to €4 million in B notes alongside EBRD. The project sponsors have sought the support of Soficatra, a Belgian investment management and consulting company that specializes in project finance at the community level, financial engineering, and consultancy on mergers and acquisitions. Soficatra plans to invest €1.0 million, with the same allocation between A and C notes as the founding partners.- Investment ApproachCOOP-EST will provide the financing either directly to local financial institutions or through regional bank intermediaries (such as Bank BISE and its subsidiary TISE in Poland) that serve such local financial institutions. The risk retained by COOP-EST will be that of local financial institutions and regional bank intermediaries. Poland and Slovakia are expected to be among the first countries targeted by the fund. The overall geographic balance of the fund’s investment will depend largely on the existence of a sufficiently stable legal framework, as well as the existence of reliable and readily operational partners. Proposed exposure guidelines include a 15% single client exposure limit and a 15% single country exposure limit (with the exception of Poland). In addition, the proceeds of the facility are subject to limitations in terms of the type of beneficiary institution (bank or non-bank) and type of investment (equity or debt). - Fund Management COOP-EST will be managed by a steering management group which initially will be staffed by three key members. COOP-EST will also create regional offices both in Poland (TISE) and in Slovakia (VERNUS). These offices will be responsible for prospecting eligible projects, and TISE will have the added responsibility of undertaking the due diligence of all eligible projects. The management group will have at its disposal an investment committee consisting of recognized investment professionals. The back-office functions of COOP-EST would be managed by Soficatra in Belgium, which would be responsible for follow-up and reporting.