EBRD- Italy Local Enterprise Facility

complete

The EBRD is considering: (i) the fifth replenishment of the “Local Enterprise Facility” (“LEF” or the “Facility”) originally approved on January 13, 2006; and (ii) the extension of the Facility’s operational territory to Cyprus. The Facility provides the Bank with an instrument to meet the growing business needs of local medium and large enterprises, currently not sufficiently supported by other financing sources. The Bank’s proceeds will be used for financing of acquisitions, expansion and/or modernization investments, as well as working capital. This fifth replenishment of the Facility by the EBRD will be in the amount of EUR 100 million. In this way the total commitment to the Facility will increase to EUR 505 million (including the existing allocation of EUR 380 million from the Bank’s ordinary funds, EUR 20 million of funds from the Italian Investment Special Fund contributed by the Italian government and EUR 5 million from the Bank’s Shareholders Special Fund). Transition impact is expected in the following key areas: Local private enterprises and financial institutions operating in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Egypt FYR Macedonia, Jordan, Kosovo, Montenegro, Morocco, Romania, Serbia, Tunisia and Turkey. EUR 100 million for providing a wide range of flexible financing instruments (equity, quasi-equity and debt financing, including guarantees and risk-sharing arrangements) to local enterprises and financial institutions. Deeply subordinated co-financing resources of EUR 20 million were provided by the Italian Government and EUR 5 million by the EBRD’s Shareholders Special Fund, as part of previous replenishments. EUR 200 million (expected). Sub-projects financed through this Facility will be categorised and appraised on a case-by-case basis in accordance with the Bank’s Environmental and Social Policy (“ESP”). Where the Bank is investing in projects or companies that present a potentially higher environmental and/or social risk, commensurate studies will be carried out with assistance from external consultants to fully understand all related liabilities and risks associated with a company’s operations, as well as to develop and agree upon an environmental action plan as required. Further, the environmental and social due diligence undertaken on a case by case basis will look to identify and / or confirm potential environmental and social benefits to be realised through the delivery of the projects. Target borrowers/ investee companies will be required to comply with the Bank's Performance Requirements and provide the Bank with an annual report on environmental and social issues. EUR 7 million provided by the Italian Government to be used for providing advisory services and other technical cooperation for: (i) investment screening activities which may generate, directly or indirectly, projects for financing under the Facility; (ii) investment due diligence; (iii) post-investment advisory and monitoring activities; and (iv) other activities as agreed by the Bank and the donor. EUR 4 million contributed by: the EBRD Shareholders Special Fund (EUR 1.5 million) and the SEMED Multi-Donor Account (EUR 2.5 million) to start building adequate capacity to deliver investments in Egypt, Jordan, Morocco and Tunisia through LEF. The allocated TC budget is being utilised to: (i) hire bankers (on fixed-term contracts); (ii) fund all the project preparation and implementation activities; and (iii) structure portfolio management with the objective to provide added value and transition-related achievements for each of the prospective investee companies; EUR 3.2 million contributed by the EBRD Shareholders Special Fund (EUR 2.95 million) and Norway (EUR 250,000) to support the Bank’s efforts in pipeline preparation, due diligence, including drafting and negotiating of legal documents, and post-investment monitoring in LEF’s legacy countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Kosovo, Montenegro, Romania, Serbia and Turkey). The TC resources are used also for hiring TC funded bankers on fixed-term contracts to work on the Facility from ROs. EUR 275,000 contributed by the EBRD Shareholders Special Fund to support the LEF/BAS Financial Reporting & Management Programme, a capacity building programme co-managed by the LEF and BAS teams to enhance financial reporting and management capacity in local private enterprises eligible for or already receiving LEF financing; Claudio Viezzoli (viezzolc@ebrd.com)