Washington D.C., April 3, 2002
—The International Finance Corporation, the private sector arm of the World Bank Group, will invest Euro 20 million in Tigar Rubber Products Company A.D., a leading tire and rubber goods producer in the Federal Republic of Yugoslavia (FRY) and the Balkans. The investment, which is the largest attraction of finance in a single private Yugoslav company in more than a decade, reflects IFC’s continued support for the growth of FRY's private sector—a key factor in the country's ongoing transition to a market economy.
Mr. Khosrow Zamani, Director of IFC’s Southern Europe and Central Asia Department, said, “The IFC investment will provide much-needed long term credit to a private manufacturing company and a key employer. It is imperative that FRY’s manufacturing sector has sustained access to credit and other financial services that are an essential element of growth.” Mr. Zamani also expressed hope that Tigar could become a model for future foreign investment in FRY’s manufacturing sector.
After a decade of war and international isolation, Tigar’s production capacity and product competitiveness have been substantially challenged. Despite this difficult environment, the company succeeded in continuing its operations, maintaining its position as the second largest exporter in FRY with 70 percent of its tire production exported mostly to Western European countries.
The IFC investment will support Tigar’s comprehensive two-year, 45 million Euro expansion and restructuring plan, which includes a corporate modernization program and consolidation of its existing strategic alliance with Michelin, a leading multi-national tire company. The cooperation between Tigar and Michelin dates from 1978. After 23 years of successful business relations, in December 2001 Tigar and Michelin decided to establish a joint company in 2002. IFC agreed with Tigar’s and Michelin’s proposal to become the third partner. IFC has joined with Michelin and Tigar to form a new company (TMH) that will be controlled 65 percent by Tigar, 25 percent by Michelin, and 10 percent by IFC. IFC’s investment is composed of a 16 million Euro loan before the new company is incorporated this fall and a Euro 4 million direct equity investment in TMH.
In addition, IFC is providing Tigar with an extensive technical assistance program supported by the Swedish development agency SIDA and SEED, the IFC-managed small and medium enterprise facility in the Balkans. The program aims at developing a sustainable strategy for Tigar’s non-core businesses and creating new employment opportunities in small enterprises in the Pirot area.
In May 2001, the World Bank Executive Board confirmed FRY’s succession to the membership of the former Socialist Federal republic of Yugoslavia. Following its membership to the World Bank, FRY's membership in IFC was confirmed. Since then, IFC has played an active role in FRY, assessing various business sectors with potential. During 2001 the IFC invested in two local banks that support small and medium-sized enterprises, and Euro 7.7 Million in a Yugoslav fruit juice company.
“There are many very good investment opportunities in FRY,” said Roberto Albisetti, IFC’s Chief of Mission in Yugoslavia, who has been posted in Belgrade for the past six months exploring various investment opportunities. “We are committed to supporting FRY’s private sector as it seeks to rebuild from years of war and isolation.”
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC's committed portfolio at the end of FY01 was $14.3 billion.