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A guide to
EBRD financing
The European Bank for Reconstruction and Development (EBRD) finances projects in 27 countries
from central Europe to central Asia. This guide outlines the various forms of financing available
from the EBRD. It explains how the financing is provided, the types of projects supported by the
Bank and how a project is processed.
Contents
About the EBRD
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Regional expertise
Commitments by region
Adding value
60
40
20
2000
2001
2002
2003
2004
Project structure
The EBRD tailors each project to the needs
of the client and to the specific situation of the
country, region and sector. The EBRD typically
funds up to 35 per cent of the total project
cost for a greenfield project or 35 per cent
of the long-term capitalisation of the project
company. The Bank requires significant equity
contributions from the sponsors, which must
equal or be greater than the EBRDs invest
be
involve
banking and
environmental standards.
efficiency
financial
institutions
manufacturing
municipal
and environmental
infrastructure
natural
power
resources
and energy
property
and tourism
telecommunications,
information
Interest rates
Loan features
appraisal
fee
a
front-end
senior,
subordinated, mezzanine or
convertible debt
denominated
in major foreign or
syndication
commitment
grace periods
where necessary.
1 to 15 years
project-specific
paid up-front
Covenants
Typical project finance covenants are required
as part of the loan package. Such covenants,
limiting indebtedness and specifying certain
Recourse
will be negotiated.
Loan repayment
Repayment is normally in equal, semi-annual
instalments. Longer maturities and uneven
repayment schedules may be considered
Insurance
Hedging possibilities
The EBRD can help manage financial risks
associated with a projects assets and
Security
mortgage
in the company
assignment
Equity
Guarantees
instruments include:
ordinary
subordinated
income
notes
redeemable
preference shares
underwriting
10
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following stages:
and responsibilities.
Initiation
EBRD Review
> Concept Review > Final Review > Board Review
Signing
Disbursements
Repayments
Sale of equity
Completion
1 The
Operations Committee consists of EBRD senior management from each of the Banks main departments.
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Environmental procedures
Procurement procedures
initial
assessment and/or
of an Environmental Action
of environmental conditions
of projects.
Due diligence
The EBRD places the highest importance
on ethical behaviour and transparency. The
Bank has developed standard due diligence
(www.ebrd.com/about/strategy).
Co-financing
The EBRD tries to mobilise domestic and
foreign capital because co-financing increases
the resources available for funding other
projects and introduces borrowers to the
international debt markets.
Sources of co-financing include commercial
banks, official co-financiers (such as
government agencies and bilateral financial
institutions providing grants, parallel loans
and equity), export credit agencies and other
international financial institutions, such as
the International Finance Corporation and the
World Bank. The EBRD aims to broaden and
deepen the co-financing base by increasing
the number of commercial lenders, and by
introducing new co-financing structures and
new countries into the market.
By being flexible and responding to the market,
the Bank seeks to maximise the sources
of finance available to clients and to structure
the most appropriate forms of finance.
The types of co-financing available include
A/B loans (where the EBRD finances a portion
of the loan and syndicates the remainder to
commercial lenders), parallel loans, export
credit agency guarantees, political risk
insurance, loans and equity from international
financial institutions and grants.
The EBRD works in partnership with other
institutions to increase the availability of
financing and improve the investment climate
in the region.
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Case study:
SeverTEK, Russia
SeverTEK is the first joint venture between Lukoil,
Russias biggest oil producer, and Fortum, Finlands
state-controlled energy group. The joint venture brings
together the operating and marketing experience of
these two industry leaders. When SeverTEK needed
finance to develop the South Shapkino oil field
in Russia, the EBRD acted in partnership with
HypoVereinsbank, a leading German commercial
bank. A 190 million loan was jointly arranged,
half of which was provided by the EBRD and the
other half fully underwritten by HypoVereinsbank.
The loan was structured on a limited recourse basis
to satisfy commercial banks needs, while giving
SeverTEK flexibility over how it would market
the oil. The portion of the loan underwritten by
HypoVereinsbank was successfully syndicated to
a consortium of seven private financial institutions
from various countries (Austria, Canada, France,
Germany and the Netherlands). A key factor for the
participating banks was the lower risk associated
with the loan structure. The funding provides an
alternative to Russias production sharing agreements
(PSAs) and could create a new model for financing
the Russian oil and gas sector.
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management capabilities.
guaranteed projects.
Loan finance
Applying for a loan
The EBRDs financial intermediaries consider
sound projects that support private sector
development. Each bank or programme has
its own requirements and investment limits.
For detailed financing information, contact
the intermediary directly.
Leasing
Financial and operating leases for small
businesses are available from EBRD-supported
leasing facilities. They cover a range of goods,
such as commercial vehicles, equipment and
machinery. To access finance and to check
sized enterprises.
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Equity
business experience.
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Investment range
The investment range is generally between
400,000 and 2.5 million. The target range
for the equity share is 25 to 30 per cent,
but up to 49 per cent in the short term.
The preferred investment span is three to
five years, but up to seven years is possible.
Project requirements
Each project requires:
significant
financing plans
a
a
local/regional markets
understanding
of equity investment
prospective
investment structure.
technical assistance
no
involvement in high-risk
environmental activities
no
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Trade finance
The EBRDs Trade Facilitation Programme (TFP)
promotes foreign trade with the Banks countries
of operations. Through the programme, the
EBRD takes the political and commercial
payment risk of transactions undertaken
by participating banks. The programme can
guarantee any genuine trade transaction
associated with exports from, and imports
Transaction instruments
Guarantees may be used to secure payment of
the following instruments issued or guaranteed
by issuing or confirming banks for trade
transactions to, from or between the EBRDs
countries of operations:
letters
advance
promissory notes
bid
contract guarantees.
the world.
The programme provides:
cover
finance instruments
unconditional
to issue guarantees
short-term
guarantees payable
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How to participate
Banks interested in participating in the
programme should contact the TFP Unit at the
EBRD (see page 24). Importers and exporters
should contact an issuing bank. A complete
list of issuing banks is provided on the Banks
web site (www.ebrd.com/tfp).
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the
the
business performance.
and standards.
20
an enterprise must:
be
be a small or
medium-sized enterprise
provide
an acceptable government
21
Project information
a
details
currency restrictions.
of additional sources
of funding
an
financial performance.
22
Company name
Contact person
First name
Last name
Position
Telephone
Street address
City
Postcode
Country
Web site
Location of project:
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Albania
Armenia
Azerbaijan
Belarus
Bosnia and Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
Former Yugoslav Republic of Macedonia
Georgia
Hungary
Kazakhstan
Kyrgyz Republic
Latvia
Lithuania
Moldova
Poland
Romania
Russia
Serbia and Montenegro
Slovak Republic
Slovenia
Tajikistan
Turkmenistan
Ukraine
Uzbekistan
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Resident Offices
E
uropean Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
United Kingdom