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Presentation to the European Broadcasters Union
29 October 2012
Working with the European Bankfor Reconstruction and Development
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The European Bank for Reconstruction and Development (EBRD) at a glance
International Financial Institution
Solid financial position
Development mandate
Largest investor in the region
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Established in 1991 and owned by 63 countries and the EU and EIB
(1)
AAA rating and a capital base of EUR 30bn
To foster transition towards open and democratic market economies and promote entrepreneurship
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.
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The EBRD’s Objectives
Promotes projects that expand and
improve markets and help build
institutions that underpin the market
economy
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
Supports, but does not
replace, private investment.
Provides financing at
reasonable termsProject returns are
commensurate
with risks
Project returns are
commensurate
with risks
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EBRD operates across 33 countries, 40 regional offices and 3 continents
EBRD headquarters
EBRD country of
operation
Central Europe and BalticsCroatia EstoniaHungaryLatvia
LithuaniaPoland
Slovak RepublicSlovenia
South-Eastern EuropeAlbania
Bosnia and HerzegovinaBulgaria
FYR MacedoniaRomania
MontenegroSerbia
Eastern Europe and the Caucasus
ArmeniaAzerbaijan
BelarusGeorgiaMoldovaUkraine
Central Asia and Mongolia
KazakhstanKyrgyz Republic
MongoliaTajikistan
TurkmenistanUzbekistan
Southern and eastern Mediterranean
EgyptJordan
Morocco Tunisia
Russia
Turkey
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..throughout a number of industries and sectors
Agribusiness Natural Resources
Power and Energy
Financial Institutions
Property and Tourism
Manufacturing and Services
Transport Municipal Infrastructure
Climate Finance
Information and Communication
Technologies (ICT)
Equity Funds
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EBRD provides wide financing solutions
Typical Size
Term/Holding period
Investments approach/Limits
Instruments
Debt instruments: typically from 7 to 10 years Equity Investments and Guarantees: typically from 3 to 7 years
Debt: public and private instruments, fixed and floating, syndicated loans, bonds
Equity: Private Equity, IPO Quasi Equity: mezz, convertible loans, subordinated loans
Ticket size from a low single digit EUR mn amount to over EUR 100 mn
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
Currency Local and major currencies (US$, EUR, RUB, etc.)
Exact financing terms are defined by specific project circumstances
Applications Growth capital, acquisition and consolidation, non-exclusive bidding support,
working capital, green/brown fields, JVs, privatization
“Typical” investment profile
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EBRD’s objectives achieved through financing the private sector
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% 0
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usin
ess v
olu
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An
nu
al b
usi
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ss v
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(A
BV
)
Debt ABV Equity ABV Net Cumulative Business Volume
€ billion
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Cooperation with EBRD offers companies numerous advantages
Long-term investor
Strong ties with Local & Federal Governments
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• 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
• 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
Preferred Creditor Status
5 • 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
Sector knowledge & local expertise
3• Deep knowledge and sector expertise proven by more than 140 executed
projects in the ICT sector
Structured solutions
2 • 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
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Transparency, sound business principles and TI are the key criteria for the projects financed by EBRD
Transparent Shareholding Structure
Strong Business Fundamentals
Audited Financial Statements
Transition Impact (TI)
• 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
• Sound business model with a clear return to the Bank from the main operations rather than from alternative sources
• At least 3 years of financial statements audited by reputable international or local auditing firms and prepared in accordance with IFRS
• Impact on the local economy in line with the Bank’s mandate to facilitate transitioning to the market economy
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Project Timeline
Concept Review
Contact initiated Define concept Initial company
and project information review
Mandate letter to initiate transaction
Final Structure Approval
Project Structure Approval
Board of Directors Approval
Due Diligence: Financial, Legal and Technical
Finalizing the deal terms Drafting legal documentation (term sheet)
Signing
1 2 3 4 5EBRD project cycle
The whole process timing is dependent largely on the various specific circumstances and the availability of relevant information.
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
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ICT Sector
Cumulative Financing to date: ca. €4bn
Current Portfolio: €1bn
140 transactions from low single digit million to €200mn amount
15 dedicated employees
• 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
• Content production• B2B publishing• Cinema chains• Outdoor advertising• IT services• Software developers• Systems integrators• Call centres• Internet• Cleantech• Semiconductors• FDIs
Selected SubsectorsComments
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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
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• 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 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 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
• 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
EBRD Legal Transition ProgrammeExamples of activities and locations
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Selected projects the ICT team executed in the past across all countries of operations (1/2)
Russia
2009
Syndicated Loan
Euro 258 million
Equity Investment
2011
Poland
Euro 10 million
Russia
2010
Convertible Loan
USD 20 million
Russia
2011
Investment in Bond Offering
Equity Investment
Euro 200 million
Poland
2011
Russia
2012
Equity Investmentvia Venture Capital Facility
Poland
Privatization – Equity Investment
2008
Euro 49 million
Albania
2008
Privatization - Syndicated Loan
Euro 27 million Euro 20 million
Regional
Equity Investment
2008
Poland & Balkans
2009
Loan and Equity Investment
Euro 22 million
Regional
2012
Loan
Euro 43 million
Turkey
2012
Loan
Euro 100 million
Russia
Convertible Loan
2012
USD 30 million
Russia
2009
Equity Investment
USD 11 million
Russia
2011
Equity Investment
Euro 30 million
Romania
2012
Loan
Euro 15 million
Croatia
Convertible Loan
2010
Euro 4 million
Regional
2009
Fund Investment
USD 30 million
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Selected projects the ICT team executed in the past across all countries of operations (2/2)
Ukraine
2007
Equity Investment
Euro 22.3 million
Syndicated Loan
EUR 50 million
Regional
2006
USD 72 million
Russia
2003-2005
Syndicated Loan
Bulgaria
Privatisation – Loan and Equity Investment
Euro 93 million
2004
Euro 17 million
Serbia
2004
Loan and Equity Investment
Kazakhstan
2003
Syndicated Loan
USD 110 million
Syndicated Loan
Euro 100 million
Albania
2003
Poland
2003
Loan
Euro 52.5 million
Euro 75 million
Poland
2001
Loan
Kazakhstan
2005-2007
Syndicated Loan
Euro 130 million
Czech Republic
2002
Syndicated Loan
USD 35 million
USD 35 million
Russia
2007-2008
Euro 3 million
Bulgaria
Equity Investment
2006
Euro 32 million
Regional
1999
Equity Investment
Euro 151 million
Romania
1997 - 2002
Loan
Euro 81 million
Regional
1998
Loan
Euro 65 million
Regional
1998
Equity Investment
Georgia & Bulgaria
2008
Loan and Equity Investment
USD 35 million
Loan and Equity Investment
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Investment Opportunities contact:
Director
ICT Team
Industry, Commerce & Agribusiness
Telephone : + 44 207 338 7855
The European Bank for Reconstruction and Development contact
(
Legal Transition programme contact:
Paul Moffatt
Legal Transition Team
Office of the General Counsel
Telephone : + 44 207 338 7453
EBRDOne Exchange SquareLondonEC2A 2JN
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