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BUSINESS SEMINAR PROGRAM
Hassan El Khatib – Director – ICA SEMED
Frederic Lucenet – Director – Manufacturing & Services
Tarek El Sherbini – Senior Banker - Agribusiness
Thursday, 30 May 2013
Italy & Southern and Eastern Mediterranean (SEMED):
New Investment Opportunities
© European Bank for Reconstruction and Development 2010 | www.ebrd.com
TABLE OF CONTENTS
EBRD in SEMED
1.ICA Introduction
2.ICA SEMED & sectors
3.ICA Pipeline
EBRD: A SNAPSHOT
07/07/2015
2
2. ICA Semed & Sectors
Agribusiness
Equity Fund
•
•
•
•
•
M&S
ICA SEMED Director;
2-4 Senior Bankers from
every sector team;
Total of 14 Senior bankers
focusing on SEMED;
Mapping of sector / players /
each country;
In 2012 ICA SEMED closed
• Agribusiness: 2
• EFT: 1
• M&S: 1
• SBS: 20
SBS
3
ICT
P&T
SEMED Region Challenges

Egypt:
•
The mood in Egypt is still wait and see, few corporates are forgoing politics and focusing of business
growth
•
Local currency lending became a must amidst fast devaluation and poor management of the economy.
Dollar: LE exchange started the year at 6, now at banks 6.9 and in exchange brokers 7.5
•
The country is yet to embark on parliamentary elections. No date has been announced; this is the seventh
election process after the revolution, yet the country is completely split and polarization is at its highest
•
Economic indicators are all in the red, budget deficit in excess of 10%, unemployment in excess of 13%,
etc. The IMF loan is a key component to stabilizing the macro scene, yet there is no indication of timing.
Egypt: Main macroeconomic indicators 8
2009
2010
2011
2012
2013F
GDP growth
per cent, y-o-y
4.6
5.1
1.8
2.2
2.1
CPI inflation
per cent, average
11.5
10.5
10.1
8.0
12.0
Government balance
per cent of GDP
-6.9
-8.1
-10.0
-11.0
…
Current account balance
per cent of GDP
-2.5
-1.6
-2.2
-3.2
…
Net FDI
per cent of GDP
4.3
3.1
0.9
0.8
…
External debt
per cent of GDP
20.1
16.9
15.0
13.5
…
Gross reserves
per cent of GDP
29.4
32.8
26.6
15.0
…
Private sector credit
per cent of GDP
37.8
35.2
34.3
32.4
…
Nominal GDP
US$ bn
GDP per capita
Unemployment
US$
per cent
178.8
2302
9.4
204.6
2571
8.9
220.7
2712
12.4
245.9
2939
12.5
…
…
…
Notes: All figures are for the fiscal year July-June, except unemployment and private sector credit
4
SEMED Region Challenges

Jordan:
•
The general mood in Jordan is improving, parliamentary election took place last month. A major financing
package is due to stabilize the economy.
•
The macro economy is reaching major cliff, high external debts, budget deficits and inflation which is eating
disposable income. GCC/IMF support has been announced. Refugees from Syria are estimated to be
200.000 people.
•
Local currency lending is a must in a midst these dire economic challenges, very few companies are willing
to take the FX risk.
Jordan: Main macroeconomic indicators 13
2008
2009
2010
2011
2012
2013
(proj.)
GDP growth
per cent, y-o-y
7.2
5.5
2.3
2.6
2.7
3.0
CPI inflation
per cent, avg.
13.9
-0.7
5.0
4.4
4.8
4.8
Government balance
per cent of GDP
-2.2
-8.9
-5.6
-6.8
-8.2
Current account balance
per cent of GDP
-9.3
-5.2
-7.1
-12.0
-18.1
Net FDI
per cent of GDP
12.8
10.1
6.1
5.1
4.5
External debt
per cent of GDP
63.3
61.2
63.1
61.2
60.7
Gross reserves
US$ billion
7.7
10.9
12.2
10.5
6.6
Private sector credit
per cent of GDP
79.6
76.8
74.6
74.5
73.8
Nominal GDP
US$ bn
21.9
23.8
26.4
28.8
30.9
GDP per capita
US$
3754
3953
4271
4556
4773
Unemployment
per cent
12.0
12.2
11.8
12.1
12.5
5
SEMED Region Challenges

Tunisia:
•
Unemployment, miss match in graduates vs business needs
•
Regional development and resources
•
Need a strong government that can build a vision for sustained growth with clear sector strategies
•
Banking sector is a key impediment need a full restricting and a proper pricing of risk, NPL’s, Basel
•
Tourism sector needs major restricting, linked to banking on NPL recognition, need government support
and facilitated environment for investors
Tunisia: Main macroeconomic indicators 30
2008
GDP growth
per cent, y-o-y
CPI inflation
per cent, avrg
Government balance
per cent of GDP
Current account balance
per cent of GDP
Net FDI
2009
2010
2011
2012
2013
(est.)
(proj.)
4.4
3.1
3.0
-1.9
3.7
3.8
4.9
3.7
4.5
3.5
5.9
-1.0
-3.0
-1.1
-3.8
-5.1
6.0
…
-3.8
-1.8
-4.7
-7.4
-8.1
…
per cent of GDP
6.1
3.9
3.4
2.4
4.2
…
External debt
per cent of GDP
49.0
48.2
48.5
50.9
51.0
…
Gross reserves
US$ billion
8.9
10.2
9.0
7.1
8.2
…
Private sector credit
per cent of GDP
56.3
58.7
65.0
71.1
71.2
…
Nominal GDP
US$ bn
45.3
43.5
44.3
46.3
45.6
…
GDP per capita
US$
4343
4163
4203
4307
4187
…
Unemployment
per cent
12.6
13.3
13.0
18.3
16.7
…
6
SEMED Region Challenges

Morocco:
•
The country is relatively stable versus the rest of the region. The overall mood of corporates is positive.
•
The government is working on a strategic plan for positioning Moroccan industries globally capitalizing on
its location and access to Africa.
•
Private sector corporates were receptive to EBRD and our activities yet the challenge is pricing.
•
Moroccan’s bank are quite competitive in local currency lending which limit our positioning to foreign
currency lending or equity until we have our own local currency lending
Morocco: Main macroeconomic indicators 22
GDP growth
CPI inflation
Government balance
Current account bal.
Net FDI
External debt
Gross reserves
Private sector credit
Nominal GDP
per cent, y-o-y
GDP per capita
Unemployment
US$
per cent, avrg
per cent of GDP
per cent of GDP
per cent of GDP
per cent of GDP
US$ bn
per cent of GDP
US$ bn
per cent
2008
2009
2010
2011
2012
(est.)
2013
(proj.)
5.6
3.7
0.4
-5.2
2.8
20.6
22.1
61.3
88.9
2413
9.6
4.8
1.0
-2.2
-5.4
2.1
23.3
22.8
62.8
90.9
2820
9.1
3.9
1.0
-4.6
-4.3
1.4
24.7
22.6
67.0
90.8
2854
9.1
5.0
0.9
-6.9
-8.0
2.3
23.6
18.8
69.6
99.5
2820
8.9
2.4
1.6
-7.4
-9.9
2.9
26.4
15.8
72.9
96.6
2244
9.0
5.0
2.5
…
…
…
…
…
…
…
…
…
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SEMED Region Opportunities
Opportunities
EBRD is well positioned to take a leading role as an IFI capitalising on our active private sector
development mandate.
In most countries, banks are not lending SME's and many sectors like P&T and Agri sectors
which create a good opportunity for the bank.
We have developed a strong pipeline and reach to top corporates and groups despite the late
start in 2012.
As RO's develop we will be able to mobilise much faster and efficiently meeting our targets for
2015.
We see an open field in the P&T field which allows as to pick and choose the best deals.
We will focus in 2013 on top of their class corporates, with strong financials and sound credit
case, to position the bank and to help moving SEMED within EBRD.
8
ICA Sectors /
Equity Fund
 EBRD Related:
 Key challenges:
•
Nascent, under-penetrated industry (<0.5% GDP)
•
LP Base composed mostly with DFIs
•
After the Arab Spring, general preference of MENA investors
(including GCC SWFs) is to avoid investing in the Region
•
Lack of experienced & independent Fund Managers, lack of
track record
•
Uncertainty impacting Deal flow
•
Weak fund’s corporate governance and need for in depth
team due diligence
• Starting with the strongest propositions in SEMED by
applying sound banking standards: early failures would do
long term harm to a nascent industry
• Constraints of EBRD specific geography coverage: most
funds are plan-regional
 EBRD Related:
 Opportunities:
•
PE as a key growth driver through SMEs (the Deauville
Partnership)
•
Growing regional integration
•
Strong need for expansion capital
•
Relationship management
•
Few quality funds will start fundraising in 2012-13
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•
Cooperation with other DFIs
•
Mobilising commercial capital
ICA Sectors /
Equity Fund
 Opportunities:
 Co-investment facility
 Sectors teams input to Equity:
•
• Sector teams leveraging on deal flow through generalist or
sector funds managed by various PE players in the region
Infrastructure funds: E2C2 and MEI (CRM on 15/02)
• Lending to portfolio companies
•
•
Venture-Capital funds: ICT particularly in Jordan
• Equity co-investments
Agribusiness funds: potential of knowledge sharing between
agri-funds in the EBRD historical region and those in SEMED
 SBS:
•
EFT has initiated relationship between local SBS teams and
fund managers
•
Results (as of Dec 2012): 4 approved deals and 3 deals in
progress sourced from the portfolio companies of SEMED fund
managers
 OCE: several trips already organised in the region, and further
collaboration with key relationships
 Credit: Upholding sound banking principals
 OCCO: KYC is key…..
 OGC: Close collaboration to insure implementation of best
practice in structuring and documentation
10
ICA Sectors /
ICT
Tunisia
Morocco
•
Successful IT companies look to expand through
acquisitions in Western Europe, Algeria, Sub-Saharan
Africa;
•
Good level of liquidity: local banks offer attractive longterm Dirham loans.
•
Private sector mostly small SMEs with 1-5 m Euros
funding needs;
•
Scarce liquidity available to the average SMEs
•
Opportunities for the Bank for small deals with corporate
governance challenges
•
Large groups can attract Dinars
•
Good level of liquidityEgypt
on offer for large players
•
Jordan
Strong demand for VC
financing
•
Good level of liquidity on offer for large players
•
Strong demand for VC financing
•
M&A, privatisation opportunities for the Bank in the longterm
•
Fast developing entrepreneurial ecosystem
•
•
IT companies look to expand into Africa/GCC
Opportunities for consolidation of telcos in the medium
term
11
ICA Sectors /
ICT
Sector considerations:
•
Infrastructure heavy sectors lag
Selected Situations (active + non-active) :
behind in their development
and require investments:
•
•
‒
Mobile/fixed
‒
Towers
‒
Datacenters
Small scale opportunities
‒
IT
‒
Internet
‒
MVNOs
‒
Software
Towers
Data centers
Long-term opportunities in
fixed BB
•
Limited opportunities in cable/
cable/pay-TV
12
12
ICA Sectors /
Manufacturing & Services
50 project per year for €900m.
Operating assets of €3.2bn
10 sectors in order of size:
•Metals, steel and non-ferrous
•Automotive
•Construction materials
•Forestry and paper
•Chemicals
•Health and pharmaceuticals
•Capital and intermediate goods
•Consumer goods
•Logistics and retail
•Aerospace industry
•Almost no textile
13
ICA Sectors /
Manufacturing & Services
Tunisia
Morocco
•
Export-driven in FEZ, mainly automotive suppliers
•
•
Export-driven companies: automotive, electric/electronic
equipment
Energy efficiency projects driven by high electricity price
Aerospace?
•
Privatisation of confiscated assets to support Western
Sponsors
•
Good level of liquidity on offer for large players
Egypt
•
Jordan
Strong demand for VC
financing
•
Medium size building materials, chemicals, health,
pharma, paper
•
Pharma, plastics, steel, paper
•
Energy efficiency for industry
14
ICA Sectors /
Property & Tourism
• Key importance of the tourism sector
• Longer season
• Fast growing population means a strong demand for housing
• Under-supply of modern commercial real estate
• Off-shore zones and call centres
• Energy efficiency requirements
• New potential partners (Gulf Sovereign Wealth Funds)
15
ICA Sectors /
Property & Tourism
• Strong sponsors:
A good reputation
 Experience
 Strong financials

• Projects which make commercial sense
Hotels, offices, retail, logistics, residential
 Directly or via property funds
 Equity, Senior Debt; Sub. Debt or as Fund LP

• Transition Impact
• Energy efficiency and sustainability features
16
ICA Sectors /
Property & Tourism
• Strong demand for local currency loans
• Some large projects driven by SWFs
• Political instability
• Integrity risks (land ownership, local sponsors)
• Need RO support to help identify ‘right’ opportunities
17
ICA Sectors /
Property & Tourism
Egypt
•
Significant potential due to size and
number of major cities
•
Strong and sophisticated local sponsors
•
Focus on tourism, commercial and
affordable residential
•
Jordan
•
Most diversified tourism potential
•
Major presence of SWFs in masterprojects targeting urban regeneration
•
Relatively stable politically
Hindered by political instability
Morocco
Tunisia
•
Critical mass and relative

Troubled tourism sector
•
Stability Various leads in all sub-sectors

Political issues
•
Promising SEMED country for Property &

Keen to find right deals
Tourism deals
18
ICA Sectors/
SBS
Project Preparation – DCA addresses a client’s
challenging management issues with the aim of
creating a stronger and more viable business that
may also benefit from Bank financing
Clients are offered financing options that
complement their technical assistance needs Banking and Enterprise Growth Partnership work
closely to align both
Projects may also be referred further to Business
Advisory Services, depending on specific needs,
such as Energy Efficiency
19
ICA Sectors/
SBS
Project Referred
to EGP by
Agribusiness
Investment
Support
Continues as
Needed
Projects may also be
referred to Banking by SBS
through Direct Company
Assistance – e.g.
companies that have been
screened by EGP/BAS in
the field that are too large
or out of scope for
traditional EGP/BAS
projects, and have a clear
financing need from the
onset
Project
Potentially
referred to BAS
for special needs
Technical
Assistance
Implemented by
EGP
Project Finance
in Parallel with
Technical
Assistance
20
ICA Sectors /
Agribusiness - Financing of entire food chain
Consumer
•seeds
•fertiliser
•farm
machinery
•agricultural
chemicals
•bio-tech
•distributors
•grains
•oilseeds
•livestock
•poultry
•dairy
•fish
•horticulture
•produce
•crushers
(sunflower,
soya bean)
•millers
•grain handling
•produce
market
Foodservice
Distribution
Packaging
Production
Food
Processors
Primary
Processing
•meat
•bakery
•snacks
•beverages
•frozen foods
•fish
•pet food
Production
Agricultural
Inputs
21
•glass bottles
& jars
•PET bottles
•cans
•carton
containers
•restaurants
•supermarkets
•institutions
•distributors
ICA Sectors/
EBRD and Agribusiness
Agribusiness
Agribusiness Strategy
• The EBRD has invested more than
€ 7 billion in over 450 projects in the
Agribusiness sector
• 2012: 62 projects signed with
€ 875 million committed funds +
€ 380 million in syndication
Downstream
Agricultural
inputs
& production
Upstream
Primary &
secondary
processing
Retail &
Packaging &
distribution Food Service
• All activities along the food and drink
production chain are included and rather
focused on increasing demand than supply
• One of the largest sector teams within
the EBRD with 44 bankers in London
• Vertical approach addresses specific risks and
and Resident Offices accounting for
features attached to agribusiness ventures
around 40% of the projects in the
EBRD’s corporate sector portfolio.
• Client network of leading global and
• Downstream investments are mainly in vertical
integrated companies with positive spill-over
effects to primary agriculture
regional players
• Indirect support to smaller farmers
and food enterprises via SME credit
lines
22
ICA Sectors/
Agribusiness Clients
Extensive experience in cooperating with the leading Agribusiness and
FMCG corporates of the entire food chain. We are working with local and
international clients with many follow on projects.
23
Danone – an example for a long-term
multi-project facility
2010
• Danone – global leader in fresh dairy
and bottled water production
• Long-term partnership in the region
• US$100m multi-project facility for
equity co-investments
• Sub-projects: (1) investment in dairy
companies in Bulgaria and Romania;
(2) construction of a dairy plant in
Russia and (3) acquisition of biscuit
plants in Russia and Poland
24
Bonduelle – an example for an equity investment in
a greenfield project
2003
• Bonduelle, world’s top
processed-vegetable
producer
• Project: Construction of a
greenfield vegetable canning
plant, located in the
Krasnodar region, Russia to
produce 60,000 tonnes of
fresh packaged vegetables
• €15m equity investment
25
Bel / Shostka – an example of an equity investment
in Ukraine
• Shostka, a leading cheese
producer in Ukraine, owned by
Groupe Bel, one of the world’s
leading branded cheese players
• Project: Financed Shostka’s
investment programme, including
factory modernisation and increase
in production capacity
• EBRD acquired a 17.5% stake in
• EBRD provided technical
assistance for a consulting project,
addressing milk production
seasonality and quality
26
2007
Grand – an example of an equity co-investment with
TATA into a Russian tea and coffee manufacturer
2009
• Grand is one of the largest
independent Russian tea and
coffee manufacturers selling
its products throughout
Russia.
• Project: EBRD invested
$4.7m into the capital of the
company, a joint venture of
Tata Beverages and Grand
27
John Deere in Russia - Funding to help tap into one
of the world’s biggest farm machinery markets
• John Deere - the world’s
leading manufacturer of
agricultural equipment
• Project: Financing of the
new leasing company to be
established by John Deere
in Russia to help Russian
farmers access the credit
needed to buy modern and
efficient farm machinery.
• A five-year loan of up to
4.7 billion roubles
(equivalent to EUR 114
million)
28
Agribusiness overview in the SEMED countries (1)
Jordan
Egypt
 Key challenges:
 Key challenges:
–
Most sub-sectors across the value chain remain
fragmented;
–
Low value-added production of agricultural products, as
most products are exported unprocessed;
–
Upgrading processing, logistics and retail distribution in
order to enhance efficiencies and reduce wastage.
–
Modern retail remains underdeveloped especially outside
Amman;
–
Lack of transport, logistics, and distribution infrastructure;
–
Inefficient water use and irrigation often directed to low
value crops, and low hygiene standards and traceability
along the whole production chain.
 Operational response:
–
Support investment along the food chain to strengthen
linkages and increase standards;
–
Support consolidation in agriculture and processing to
take advantage of economies of scale and facilitate
modernisation;
–
 Operational response:
Invest in logistical infrastructure (e.g. warehouses, and
cold storage)
07/07/2015
29
–
Invest in energy and water efficiency projects related to
agribusiness projects;
–
Investments in such areas as storage, logistics,
processing and modern retailing to increase capacity and
the range and quality of products available;
–
Invest in family owned companies wishing to improve their
governance standards, and internationalise their sources
of finance.
Agribusiness overview in the SEMED countries (2)
Tunisia
Morocco
 Key challenges:
 Key challenges:
–
Lower yields compared to other major agricultural
countries;
–
Underdeveloped infrastructure along the agribusiness
value chain;
–
An under-developed processing sector penalised by high
energy cost and the dominance of bulk food;
–
Food distribution dominated by traditional retail and
distribution;
–
Distribution infrastructure dominated by traditional retail
and distribution;
–
Farmers’ access to finance remains limited.
–
The dominance of oligopolies in certain sub-sectors.
 Operational response:
–
Invest in midstream agribusiness infrastructure (storage
and logistics);
 Operational response:
–
Finance modern processing targeting both domestic and
export markets;
–
Invest in companies upgrading their processing facilities
and quality to international standards;
–
Support development of modern retail and appropriate
logistical infrastructure across agribusiness value chain;
–
Support investments in modern supplier networks
accelerating the development of modern retail;
–
Focus on crops where Morocco has a competitive edge
for export activity (e.g. olive production);
–
Invest in modern retail especially in projects extending
this retail format to cities other than Tunis.
–
Support energy efficiency investments in agribusiness
companies;
–
Enhancing competition and competitevness by supporting
a variety of players.
07/07/2015
30
EBRD approach to Agribusiness in SEMED
Selected opportunities
Strategic Approach
 2012 - Signings:
 In this early phase of SEMED expansion, Agribusiness
team’s focus can summarise as follows:
–
–
Lesieur Cristal, Morocco: EUR 2.5m LT loan to finance
a new biomass boiler;
–
Borges, Tunisia: EUR 15m loan to support sourcing of
olive oil from Tunisian farmers targeting export markets;
Subsidiaries of major agribusiness multinational
companies presenting projects with:
•
(i) strong backward linkages to farmers;
•
(ii) improvement of local quality and traceability
with the aim increase local added value;
–
Focus on successful local entrepreneurs targeting
both domestic and export markets, eager to
modernise their production facilities and upgrade
their corporate governance and reporting standards;
–
Focus on major processing companies with strong
energy efficiency needs;
–
Provide complementarity to local banking offering
through innovative financial structures (e.g.
mezzanine)
07/07/2015
31
3. ICA PIPELINE
• Egypt: 23 projects representing €503.4 million
• Jordan: 16 projects representing €192.5 million
• Morocco: 17 projects representing €275.2 million
• Tunisia: 9 projects representing €88.5 million
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Contacts
Hassan El Khatib
Director – ICA SEMED
Tel: +44 (0)20 7338 8420
[email protected]
Frederic Lucenet
Director – Manufacturing & Services
Tel: +44 (0)20 7338 6079
[email protected]
Tarek El Sherbini
Senior Banker – Agribusiness
Tel: +44 (0)20 7338 6493
[email protected]
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