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Vladivostok, December 23, 2005—
The International Finance Corporation, the private sector arm of the World Bank Group, has entered into an agreement to provide its first direct ruble loan in Russia. IFC’s investment comprises a seven-year loan of approximately 255,000,000 rubles (€7.5 million equivalent) to Vladpivo, and a $5.3 million equity investment in Far East Brewing Company, Vladpivo’s parent.
IFC’s financing will support a $58 million investment program to acquire the brewery; to revive, refurbish and upgrade its facilities; and to improve the quality and consistency of its products. By 2008, the brewery is expected to have an installed capacity of 1.8 million hectoliters and achieve annual sales of 1 million hectoliters. The project will support the growth of a productive enterprise and help reduce unemployment. Upon full implementation of the project, the brewery will employ more than 500 staff.
By providing local currency financing, IFC is reducing the company’s foreign exchange exposure. IFC is also exploring the possibility of using noncommercial lending to help the company strengthen its occupational health and safety practices.
This transaction reflects IFC’s strategy to increase its support for Russian businesses that are willing to improve transparency and corporate governance. “This is IFC’s first agribusiness project in the Russian Far East. We hope that it will be a catalyst for further investments in this region where such investment has lagged,” commented Jean-Paul Pinard, director of IFC’s Agribusiness Department.
Nina Shapiro, IFC's Vice-President, Finance and Treasurer, said, “It is important for IFC to structure long-term local currency solutions for clients. We are pleased to work with the swap market to provide these ruble loans and thereby help deepen the local financial market and extend maturities.”
IFC is partnering with two of its existing clients, Detroit Investments and A-1 Group Limited, an affiliate of the Alfa Group, to invest in the revival and modernization of the Vladpivo brewery, which is located in Trudovoye, near Vladivostok.
The mission of IFC is to promote sustainable private sector investment in developing and transition 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, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
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Russia joined IFC in 1993. Since then IFC has invested $2.4 billion in the country, including $246 million in syndicated loans, in over 100 projects across a variety of sectors. In FY05 (July 2004–June 2005), IFC’s investments in the country reached $832 million. IFC’s investment portfolio in Russia currently stands at $1.7 billion, making it the largest country exposure for IFC globally. IFC has invested in key sectors, including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care. For more information, visit
www.ifc.org/europe
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