Transcript Slide 1

Working with the European Bank
for Reconstruction and Development
Presentation to the
European Broadcasters Union
29 October 2012
1
The European Bank for Reconstruction and Development
(EBRD) at a glance
1
International
Financial
Institution
Established in 1991 and owned by 63 countries and
(1)
the EU and EIB
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.
2
The EBRD’s Objectives
Promotes projects that expand and
improve markets and help build
institutions that underpin the market
economy
Transition
Impact
Project returns are
commensurate with
risks
Supports, but does not replace,
private investment. Provides
financing at reasonable terms
EBRD
Sound
Banking
Additionality
3
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
EBRD
headquarters
EBRD country of
operation
Southern and eastern
Mediterranean
Egypt
Jordan
Morocco
Tunisia
Central Europe and Baltics
South-Eastern Europe
Croatia
Estonia
Hungary
Latvia
Lithuania
Poland
Slovak Republic
Slovenia
Albania
Bosnia and Herzegovina
Bulgaria
FYR Macedonia
Romania
Montenegro
Serbia
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Russia
Turkey
..throughout a number of industries and sectors
Agribusiness
Power and
Energy
Climate
Finance
Property and
Tourism
Manufacturing
and Services
Natural
Resources
Transport
Financial
Institutions
Municipal
Infrastructure
Information and
Communication
Technologies (ICT)
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Equity Funds
EBRD provides wide financing solutions
“Typical” investment profile
Typical Size
Term/Holding
period
Instruments
Currency
 Ticket size from a low single digit EUR mn amount to over EUR 100 mn
 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
 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
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EBRD’s objectives achieved through financing the
private sector
€ billion
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As at end June
2012:
– €3.4 billion
invested in
153 projects
– Private sector
accounted for
79% share
– Debt 84% &
Equity 16%
75
70
10
65
60
55
8
50
45
6
40
35
30
4
25
20
Net cumulative business volume

Invested over
€75.2 billion
in more than
3,468 projects
since 1991
Annual business volume (ABV)

80
15
2
10
5
0
0
Debt ABV
7
Equity ABV
Net Cumulative Business Volume
Cooperation with EBRD offers companies numerous
advantages
1
2
Long-term
investor
Structured
solutions
•
•
•
•
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
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
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Transparency, sound business principles and TI are the
key criteria for the projects financed by EBRD
1
2
3
4
Transparent
Shareholding
Structure
•
Strong Business
Fundamentals
•
Sound business model with a clear return to the Bank from the main operations
rather than from alternative sources
Audited Financial
Statements
•
At least 3 years of financial statements audited by reputable international or local
auditing firms and prepared in accordance with IFRS
Transition Impact
(TI)
•
Impact on the local economy in line with the Bank’s mandate to facilitate
transitioning to the market economy
•
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
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Project Timeline
EBRD project cycle
1
2
Concept
Review
 Contact initiated
 Define concept
 Initial company
and project
information
review
 Mandate letter to
initiate
transaction
Mandate letter
Signed
3
Project
Structure
Approval
4
Final
Structure
Approval
 Due Diligence: Financial, Legal and
Technical
 Finalizing the deal terms
 Drafting legal documentation (term sheet)
Term sheet
Signed
5
Board of
Directors
Approval
 The Board makes
a final review and
approves the
project
Signing
 Funds are
ready to be
disbursed
Legal Documents
Signed
The whole process timing is dependent largely on the various specific circumstances
and the availability of relevant information.
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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
• Mobile & fixed line
• ISPs
• Cable TV
• Towers
• Satellites
• Data centres
• Fibre
• Wireless broadband
• MVNO
• Pay-TV
• Mobile payments
• Content production
• B2B publishing
• Cinema chains
• Outdoor advertising
• IT services
• Software developers
• Systems integrators
• Call centres
• Internet
• Cleantech
• Semiconductors
• FDIs
Investments into the ICT sector are viewed as a key tool in modernizing the local
economy and increasing its innovation and competitiveness
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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
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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
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EBRD Legal Transition Programme
ICT 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 - 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
• 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)
Russia
Convertible Loan
USD 30 million
2012
Russia
Investment in Bond
Offering
Turkey
Loan
Regional
Equity Investment
via Venture Capital Facility
Euro 100 million
2012
2012
Poland
Russia
Equity Investment
Euro 10 million
2011
Russia
2011
Loan
Euro 43 million
Euro 15 million
2012
2012
2011
Russia
Croatia
Russia
Convertible Loan
Syndicated Loan
USD 11 million
USD 20 million
2009
2010
Albania
Russia
Poland & Balkans
Regional
Equity Investment
Loan and Equity
Investment
Fund Investment
Euro 30 million
Euro 22 million
USD 30 million
2011
2009
2009
Privatization Syndicated Loan
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Poland
Loan
Convertible Loan
Equity Investment
Romania
Euro 4 million
2010
Equity Investment
Euro 200 million
Euro 258 million
2009
Poland
Regional
Privatization – Equity Investment
Equity Investment
Euro 27 million
Euro 49 million
2008
2008
Euro 20 million
2008
Selected projects the ICT team executed in the past across
all countries of operations (2/2)
Georgia & Bulgaria
Loan and Equity
Investment
USD 35 million
Russia
Syndicated Loan
USD 35 million
Euro 22.3 million
Euro 130 million
Euro 3 million
EUR 50 million
2006
2006
Bulgaria
Privatisation – Loan and
Equity Investment
Euro 93 million
2007
Serbia
Kazakhstan
Albania
Poland
Syndicated Loan
Syndicated Loan
Loan
Euro 17 million
2004
2004
Czech Republic
Romania
Poland
Syndicated Loan
Loan
Loan
Euro 151 million
1997 - 2002
2005-2007
Loan and Equity
Investment
2003-2005
2002
Regional
Equity Investment
Russia
USD 35 million
Bulgaria
Syndicated Loan
2007-2008
USD 72 million
Kazakhstan
Equity Investment
2008
Syndicated Loan
Ukraine
Loan and Equity
Investment
USD 110 million
2003
Regional
Equity Investment
Euro 75 million
2001
Euro 32 million
1999
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Euro 100 million
2003
Euro 52.5 million
2003
Regional
Regional
Loan
Equity Investment
Euro 81 million
1998
Euro 65 million
1998
The European Bank for Reconstruction and Development
contact
Investment Opportunities contact:
Legal Transition programme contact:
Director
ICT Team
Industry, Commerce & Agribusiness
Paul Moffatt
Legal Transition Team
Office of the General Counsel
Telephone : + 44 207 338 7855
Telephone : + 44 207 338 7453
EBRD
One Exchange Square
London
EC2A 2JN
(
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