Opportunities for Small & Medium-Sized Enterprises 30 May 2013 Claudio Viezzoli, Director, EBRD European Bank for Reconstruction and Development 2010 www.ebrd.com
The Context In many EBRD countries, the SME sector represents the backbone for future economic growth. This is especially true in smaller and less developed economies and regions such as the Western Balkans and the smaller SEMED countries. However, the domestic financial sector is insufficiently deep and broad to meet the financing requirements of the SME sector: Funding in longer tenors and in local currency is typically scarce. Financing beyond senior secured debt is rare. The limited amount of term loan financing is rationed to larger companies with high-quality security to pledge. Financing is mostly available in USD or Euro, exposing unhedged SMEs to large FX risk. EBRD contributes to the development of the SME sector through more and tailormade financing (direct or indirect), renewed intensive advisory services and policy dialogue to improve the business environment. 31/05/2013 2
The Context EBRD financing to local SMEs is targeted by the Bank via parallel, but intrinsically connected and strongly complementary, mechanisms: Indirectly: via financial intermediaries (local FIs and PE funds), through many FI SME dedicated facilities, deployed across all countries: Competitiveness SMEs Energy efficiency Directly: through direct investments via several proprietary facilities created for direct tailor-made financing. The primary objective of such direct facilities is to allow an easier access to EBRD financing for our smaller clients: Easier, streamlined and faster processes Extra support to prepare and monitor projects Co-operation with other institutions financing SMEs to create synergies Strong connections with local banking communities in our CoOs Political protection for our clients (e.g. discriminatory use of tax regimes) Very deep knowledge of local economies / clients through our offices 31/05/2013 3
One example: the Local Enterprise Facility (LEF) Facility Established in 2006, with the support and co-financing of the Italian Ministry of Economy Eligible countries Balkans (Albania, Bosnia & Herzegovina, Bulgaria, Croatia, FYR Macedonia, Kosovo, Montenegro, Romania, Serbia), Turkey, and the SEMED region (Egypt, Jordan, Morocco, Tunisia) Sectors All sectors with a focus on expansion capital, restructuring or acquisitions of existing private businesses (both locally or internationally controlled) Financing The Facility provides between 1 Mln and 10 Mln Debt, equity and quasi-equity financing Up to 40% of project cost 4
LEF Resources 400 million of capital provided jointly by the EBRD ( 380 million) and the Italian government ( 20 million) A team of bankers in EBRD s resident offices in Amman, Belgrade, Bucharest, Cairo, Casablanca, Istanbul, Podgorica, Pristina, Sarajevo, Skopje, Sofia, Tirana and Zagreb, as well as soon in Tunis Supported by Technical Cooperation funds ( 13 million) for project development, pre- and post-investment technical assistance, provided by the Italian government, the EU and other donors Streamlined investment approval process Strong support post-investment to investee companies Close co-operation with Italian institutions such as commercial banks, Simest, Finest, SACE, to provide a cohesive package for clients 31/05/2013 5
Example of integration of financing SACE Simest/Finest Guarantees for SMEs investing abroad Italian company Interest rate subsidy della Up to 49% of equity Locally incorporated company Project EBRD via LEF Up to 40% of project financing (debt&equity) Up to 50% of project preparation costs 6
Example of integration of financing SACE Simest/Finest Guarantees for SMEs investing abroad Italian company Interest rate subsidy on banks loans for equitydella Eur 2mm equity Locally incorporated company Eur 2 mm equity EUR 10mm project: 40% equity, 60% debt Eur 2 mm debt from Local banks EBRD Up to 40% of project financing (debt&equity) Up to 50% of project preparation costs 7
Lesieur Cristal, Morocco Client: Lesieur Cristal, a joint stock company listed on the Casablanca Stock Exchange and leading Moroccan producer of edible oil and soap EBRD Finance: EUR 2.5 million loan Use of proceeds: construction and launch of a biomass boiler, improving energy efficiency and overall profitability Signed in 2012 8
Donalam, Romania Client: Rolling mill plant for the production of steel rounds owned by Beltrame Group (86%) and Finest (14%) EBRD Finance: EUR 4 million senior loan Use of proceeds: financing the EUR 20 million capex expansion plan to expand product range Signed in 2013 9
Forma Ideale, Serbia Client: Limited liability company that produces a wide range of furniture EBRD Finance: EUR 5+2 million equity investment Use of proceeds: Construction of a modern warehouse and logistics centre and restructuring of the company s balance sheet Signed in 2010 10
Sustainable Energy Financing Need Loans for direct financing for (small) renewable energy and (industrial) energy efficiency projects Eligible countries WB, Turkey and SEMED Resources Up to EUR 20 million in Technical Cooperation (TC) to prepare projects from a technical and financial viewpoint Features Average project from EUR 2 million to EUR 6 million EBRD financing (max EUR 10 million) Average (expected) maturity of 6-8 years for energy efficiency and 10-12 years for renewable energy projects (max 15 years) 11
IMPG, FYR Macedonia Client: IMPG, owned by C.I. Power, joint venture btw Condotte SpA and ICUN SpA EBRD Finance: A senior loan in the amount of EUR 6 million Use of Proceeds: The construction, operation of four small hydro-power plants with total installed capacity of up to 8 MW Signed in 2012 12
Questions? First: how to get the best advice? EBRD representatives in the country Second: How do I make my case? Prepare a business plan to discuss Meet informally with bankers to verify EBRD s interest Third: what should I expect? A quick reply on feasibility (4-5 days) Followed by first decision (2-3 weeks) Length of process (2-5 months) depending on complexity Can I ask EBRD to help me find other financiers and take leading role? Yes 31/05/2013 13
EBRD and Italy Italy is a founding member of the EBRD, with an 8.52 per cent capital share. Italy is one of the strongest sources of foreign direct investment in the EBRD s countries of operations: joint Italy-EBRD investment stood at 16.2 billion as of January 2013. Italian banks are leading financial intermediaries in many countries Italian banks are also involved in the Trade Facilitation Programme (TFP), through which the EBRD guarantees the payment of trade finance instruments (such as letters of credit or payment guarantees) issued by banks in the EBRD s countries of operations to foreign confirming banks. 31/05/2013 14
Contact details: Business Development Unit EBRD One Exchange Square London EC2A 2JN United Kingdom E-mail: newbusiness@ebrd.com Tel: +44 20 7338 7168 Fax: +44 20 7338 7848 www.ebrd.com EGYPT: Philip Ter Woort Director, Egypt Tel: + 20 (0) 010 2457 7113 terwoorp@ebrd.com TUNISIA: Marie-Alexandra Veilleux Head of Office, Tunis Tel: +216 24100690 veilleum@ebrd.com JORDAN: Heike Harmgart Head of Office, Amman Tel: ++962 777707747 harmgarh@ebrd.com MOROCCO: Laurent Chabrier Director, Morocco Tel: +212 656605180 chabriel@ebrd.com 15