Working with the european bank for reconstruction and development
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Working with the European Bank for Reconstruction and Development. Presentation to the European Broadcasters Union 29 October 2012. The European Bank for Reconstruction and Development (EBRD) at a glance. 1. International Financial Institution.

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Working with the european bank for reconstruction and development

Working with the European Bankfor Reconstruction and Development

Presentation to the

European Broadcasters Union

29 October 2012


The european bank for reconstruction and development ebrd at a glance

The European Bank for Reconstruction and Development (EBRD) at a glance

1

International Financial Institution

Established in 1991 and owned by 63 countries and the EU and EIB(1)

2

Solid financial position

AAA rating and a capital base of EUR 30bn

3

Development mandate

To foster transition towards open and democratic market economies and promote entrepreneurship

4

Largest investor in the region

In 2011 Annual Business Volume amounted to EUR9.1bn comprising 380 projects

(1) 57% of shareholding is G7 and 84% is OECD country based. EU27 countries hold 62.8% of the shareholding.


The ebrd s objectives

The EBRD’s Objectives

Promotes projects that expand and improve markets and help build institutions that underpin the market economy

Supports, but does not replace, private investment. Provides financing at reasonable terms

Project returns are commensurate with risks


Ebrd operates across 33 countries 40 regional offices and 3 continents

EBRD operates across 33 countries, 40 regional offices and 3 continents

Central Asia and Mongolia

Kazakhstan

Kyrgyz Republic

Mongolia

Tajikistan

Turkmenistan

Uzbekistan

Eastern Europe and the Caucasus

Armenia

Azerbaijan

Belarus

Georgia

Moldova

Ukraine

Central Europe and Baltics

Croatia

Estonia

Hungary

Latvia

Lithuania

Poland

Slovak Republic

Slovenia

South-Eastern Europe

Albania

Bosnia and Herzegovina

Bulgaria

FYR Macedonia

Romania

Montenegro

Serbia

Southern and eastern Mediterranean

Egypt

Jordan

Morocco

Tunisia

EBRD headquarters

EBRD country of

operation

Russia

Turkey


Throughout a number of industries and sectors

..throughout a number of industries and sectors

Agribusiness

Property and Tourism

Manufacturing and Services

Natural Resources

Power and Energy

Transport

Financial Institutions

Municipal Infrastructure

Climate Finance

Information and Communication Technologies (ICT)

Equity Funds


Ebrd provides wide financing solutions

EBRD provides wide financing solutions

“Typical” investment profile

Typical Size

  • Ticket size from a low single digit EUR mn amount to over EUR 100 mn

Term/Holding period

  • Debt instruments: typically from 7 to 10 years

  • Equity Investments and Guarantees: typically from 3 to 7 years

Instruments

  • Debt: public and private instruments, fixed and floating, syndicated loans, bonds

  • Equity: Private Equity, IPO

  • Quasi Equity: mezz, convertible loans, subordinated loans

Currency

  • Local and major currencies (US$, EUR, RUB, etc.)

Investments approach/Limits

  • EBRD typically acts as a co-investor along other sponsors

  • EBRD’s stake typically does not exceed 35% of the total investments (equity and debt) or 50% in case of syndication with other international banks

Applications

  • Growth capital, acquisition and consolidation, non-exclusive bidding support, working capital, green/brown fields, JVs, privatization

Exact financing terms are defined by specific project circumstances


Ebrd s objectives achieved through financing the private sector

EBRD’s objectives achieved through financing the private sector

€ billion

  • Invested over €75.2 billion in more than 3,468 projects since 1991

  • As at end June 2012:

    • €3.4 billion invested in 153 projects

    • Private sector accounted for 79% share

    • Debt 84% & Equity 16%


Cooperation with ebrd offers companies numerous advantages

Cooperation with EBRD offers companies numerous advantages

1

Long-term investor

  • EBRD aims to develop long-term relationships - typical investment horizon is up to 10 years with longer financing available

  • The Bank relies on a buy-and hold approach, which decreases its dependence on the short term market fluctuations

2

Structured solutions

  • Transactions are tailored to the needs of the clients and a variety of financial structures are considered

  • Non-standard structures are welcome and a large range of transaction sizes

3

Sector knowledge & local expertise

  • Deep knowledge and sector expertise proven by more than 140 executed projects in the ICT sector

4

Strong ties with Local & Federal Governments

  • EBRD has established strong and long lasting connections with Local and Federal Governments that allow the Bank to promote and defend interests of its portfolio companies

5

Preferred Creditor Status

  • EBRD has a Preferred Creditor Status, which exempts payments to EBRD generalised moratoria and foreign exchange controls. It allows EBRD to provide financing even in the hardest market conditions


Working with the european bank for reconstruction and development

Transparency, sound business principles and TI are the key criteria for the projects financed by EBRD

1

Transparent Shareholding Structure

  • Full transparency of the ownership structure and complete disclosure of the end beneficiaries

  • High level of integrity both among owners and managers and high standards of corporate governance

2

Strong Business Fundamentals

  • Sound business model with a clear return to the Bank from the main operations rather than from alternative sources

3

Audited Financial Statements

  • At least 3 years of financial statements audited by reputable international or local auditing firms and prepared in accordance with IFRS

4

Transition Impact (TI)

  • Impact on the local economy in line with the Bank’s mandate to facilitate transitioning to the market economy


Project timeline

Project Timeline

EBRD project cycle

1

2

3

4

5

Concept Review

Project Structure Approval

Final Structure Approval

Board of Directors Approval

Signing

  • Contact initiated

  • Define concept

  • Initial company and project information review

  • Mandate letter to initiate transaction

  • Due Diligence: Financial, Legal and Technical

  • Finalizing the deal terms

  • Drafting legal documentation (term sheet)

  • The Board makes a final review and approves the project

  • Funds are ready to be disbursed

Mandate letter Signed

Term sheet Signed

Legal Documents Signed

The whole process timing is dependent largely on the various specific circumstances and the availability of relevant information.


Ict sector

ICT Sector

Selected Subsectors

Comments

  • Cumulative Financing to date: ca. €4bn

  • Current Portfolio: €1bn

  • 140 transactions from low single digit million to €200mn amount

  • 15 dedicated employees

  • Content production

  • B2B publishing

  • Cinema chains

  • Outdoor advertising

  • IT services

  • Software developers

  • Systems integrators

  • Call centres

  • Internet

  • Cleantech

  • Semiconductors

  • FDIs

  • Mobile & fixed line

  • ISPs

  • Cable TV

  • Towers

  • Satellites

  • Data centres

  • Fibre

  • Wireless broadband

  • MVNO

  • Pay-TV

  • Mobile payments

Investments into the ICT sector are viewed as a key tool in modernizing the local economy and increasing its innovation and competitiveness


Ict sector investments

ICT Sector Investments

  • Eurovision

  • Russia Towers - equity investment to finance shared communication infrastructure for mobile and fixed wireless telecom operators in Russia

  • Emitel – financing an investment programme including (i) new digital terrestrial broadcasting services, and (ii) expansion of telecoms tower services as an independent tower operator


Ict sector investments financing digitisation

ICT Sector Investments: Financing Digitisation

  • Broadcaster’s need digital infrastructure, including network and digitisation equipment, to respond technological changes and ensure preservation of existing cultural heritage.

  • EBRD financing available for bankable operations (i.e., revenue generating project and/or sovereign guarantee) that are consistent with mandate.

  • Potential revenue streams:

    • Fees for use of digital library

    • Creation of cinema pre-shows mixing advertising, branded entertainment and local content

    • Use of the digital infrastructure for non-public purposes: sports, industrial, commercial, etc.

    • Fees from distribution to cable channels for expatriate viewing


Ebrd legal transition programme ict sector support overview

EBRD Legal Transition ProgrammeICT sector support - overview

  • Focus on development of sector/optimising its impact across the economy

    • Attraction of investment

    • Introduction, enhancement or maintenance of competition

    • Balancing incentive to existing players to invest with access based competition

  • Helps with identification of investment bottlenecks

    • Absent or short-sighted policies

    • Absent or flawed laws

    • Absent or weak institutions

    • Absent or outdated methodologies

    • Absent or weak capacity


Ebrd legal transition programme ict sector support overview1

EBRD Legal Transition ProgrammeICT sector support - overview

  • Works with government to modernise policy/regulation to encourage investment

    • Policy dialogue

    • Technical cooperation support

    • Outreach

  • Linked to actual Bank investment projects, whenever possible


Ebrd legal transition programme examples of activities and locations

EBRD Legal Transition ProgrammeExamples of activities and locations

  • Activities

    • Training and capacity building

    • ICT policy development

    • Primary and secondary law drafting and adoption

    • Regulatory implementation

    • High-speed broadband roll-out framework

    • Digital Broadcasting Switchover policy and implementation

    • Radio frequency spectrum rationalisation

    • Infrastructure access and sharing

  • Countries: Albania, Armenia, Azerbaijan, Georgia, Jordan, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Montenegro, Serbia, Tajikistan, Ukraine


Selected projects the ict team executed in the past across all countries of operations 1 2

Selected projects the ICT team executed in the past across all countries of operations (1/2)

Russia

Convertible Loan

Russia

Turkey

Regional

Poland

Russia

Russia

Russia

Russia

Poland

Loan

Equity Investment

Loan

Investment in Bond Offering

Equity Investment

Croatia

Convertible Loan

Convertible Loan

Syndicated Loan

Equity Investment

Equity Investmentvia Venture Capital Facility

Euro 43 million

USD 11 million

Euro 100 million

USD 30 million

Euro 258 million

Euro 200 million

USD 20 million

Euro 10 million

Euro 4 million

2012

2012

2012

2009

2012

2009

2011

2010

2011

2011

2010

Romania

Russia

Equity Investment

Loan

Euro 30 million

Euro 15 million

2012

2011

Regional

Fund Investment

Regional

Equity Investment

Poland

Privatization – Equity Investment

Albania

Poland & Balkans

USD 30 million

Loan and Equity Investment

Privatization - Syndicated Loan

Euro 22 million

Euro 20 million

Euro 27 million

Euro 49 million

2009

2009

2008

2008

2008


Selected projects the ict team executed in the past across all countries of operations 2 2

Selected projects the ICT team executed in the past across all countries of operations (2/2)

Romania

Bulgaria

Equity Investment

Regional

Regional

Regional

Loan and Equity Investment

Loan

Equity Investment

Equity Investment

Loan

Euro 65 million

Euro 81 million

Euro 151 million

Euro 32 million

Euro 3 million

1997 - 2002

1998

1999

1998

Serbia

2006

Russia

Ukraine

Regional

Bulgaria

Kazakhstan

Loan and Equity Investment

Syndicated Loan

Privatisation – Loan and Equity Investment

Equity Investment

Syndicated Loan

Syndicated Loan

Euro 130 million

Euro 22.3 million

EUR 50 million

USD 72 million

Euro 93 million

Euro 17 million

2007

2003-2005

2004

2006

2004

2005-2007

Albania

Poland

Kazakhstan

Poland

Czech Republic

Loan

Syndicated Loan

Syndicated Loan

Loan

Syndicated Loan

Russia

Georgia & Bulgaria

Euro 52.5 million

USD 110 million

Euro 100 million

USD 35 million

Euro 75 million

Loan and Equity Investment

USD 35 million

USD 35 million

2003

2003

2002

2003

2001

2007-2008

2008


The european bank for reconstruction and development contact

The European Bank for Reconstruction and Development contact

Investment Opportunities contact:

Director

ICT Team

Industry, Commerce & Agribusiness

Telephone : + 44 207 338 7855

Legal Transition programme contact:

Paul Moffatt

Legal Transition Team

Office of the General Counsel

Telephone : + 44 207 338 7453

EBRD

One Exchange Square

London

EC2A 2JN

(


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