Projects in Hungary

Project Summary Documents

Project Summary Documents (PSDs) are disclosed for each project prior to Board consideration. They contain project descriptions, financial details, client information, environmental issues, tender guidelines, and contact details. PSDs for private sector projects are disclosed at least 30 days prior to Board consideration and for state sector projects, at least 60 days.

Project Summary Documents 

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb) 

Case studies

Increasing consumer choice

The growth of hypermarkets in Hungary is good news for both customers and local food producers. Farmers and local growers benefit from an increase in demand for their goods while consumers enjoy greater choice. This dual benefit is to be strengthened following EBRD support for the expansion of a hypermarket chain operated under the Cora name.

The Louis Delhaize Group, which already has six hypermarkets in Hungary, is working on the construction of another three hypermarkets across the country, using a €160 million loan arranged by the EBRD and supported by a group of commercial banks led by RZB of Austria.

In addition to increasing their overall sales, local food producers will benefit from the hypermarkets’ assistance in upgrading quality standards and providing training in areas such as food hygiene and presentation. The company is also working with producers to develop the markets in organic products and other speciality foods.

Prompt payment from the hypermarkets and long-term sales contracts should help local suppliers obtain financing from their banks for further investments. At the same time, consumers will benefit from a reduction in the cost of food prices as a result of the hypermarkets’ economies of scale and improved efficiency.

The project with Louis Delhaize is expected to lead to new store developments in Romania and Serbia and Montenegro. “With the EBRD’s involvement, we were able to raise significant financing from the commercial market to complement the Bank’s loan,” said Vincent Descours, Chief Financial Officer of the Louis Delhaize Group. “With strong financial backing, we are well-positioned to continue our growth in central and south-eastern Europe.”

SME finance

Access to debt and equity finance for Hungarian SMEs was facilitated in 2001 through the efforts of the EBRD, the European Commission, ABN Amro and Volksbank.

The EBRD signed a HUF 2.5 billion (€10 million) credit line to Volksbank Hungary to support SMEs in Hungary. The project includes a substantial package of incentives made available by the European Community for technical cooperation aimed at developing a sustainable SME lending programme for Volksbank and to help cover the costs of developing this programme. Volksbank Hungary was set up in 1993 by Austria's Volksbank, and it is an effective partner for the EBRD to encourage the growth of SMEs and entrepreneurs in Hungary.

The EBRD, the European Community (EC) and ABN Amro joined forces to create Euroventures Danube BV, a €15 million private equity fund targeting fast-growing small companies with a technology bias. The fund will provide all traditional types of private equity and venture capital finance – particularly expansion finance, in Hungary, Romania, Slovenia and the Slovak Republic, with maximum commitments of €1 million per company.

Both projects were developed under the SME Finance Facility funded jointly between the EBRD and the EC. This encourages the growth and development of SMEs by providing easier access to loans, leasing and equity finance from local financial intermediaries in the EU candidate countries.

Matáv

Matáv is a model of modernisation and privatisation of an incumbent utility in central Europe. The EBRD has played a significant role in Matáv's development since 1992 through a succession of debt and equity transactions, each tailored to Matáv's progress through stages of transition.

In 1991, the EBRD provided a DEM 185 million 12-year loan backed by a sovereign guarantee to finance essential modernisation and expansion of Matáv's facilities, including establishment of a trunk network, and replacement of the existing manually operated systems by full automation.

Pre-privatisation equity was provided in 1993 (in the form of US$ 53 million convertible preference shares) to finance nation-wide network digitalisation. The EBRD's investment ahead of privatisation helped enhance the attractiveness of the company to potential investors. The 1993 privatisation of Matáv proved to be highly successful and paved the way in the region. In November 1997 the company was listed on the Budapest and New York stock exchanges via an initial public offering (IPO).

In 1995, the EBRD, the International Finance Corporation (IFC) and Deutsche Bank jointly arranged a US$ 300 million multi-currency syndicated corporate debt facility, Matáv's first appearance on the international debt market. This third phase of the EBRD financing supported the expansion and modernisation of the network.

In 1998, the EBRD issued a bond exchangeable into shares of Matáv. This was the first exchangeable bond originating from central and eastern Europe and the first by a supranational institution. The twin aims were to further enhance the region's capital markets and attract new investors to the company.

Matáv is now a leading listed Hungarian telecom provider, able to face competition in a liberalised market and seek growth opportunities in the region's less advanced countries.