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€68 million EBRD financing helps Kesko expand in Baltics
In one of the largest financings ever to a retailer in the Baltic states, the European Bank for Reconstruction and Development is providing €61.3 million in loans and €6.7 in equity financing to Kesko, the leading Finnish retail group, and two affiliated real estate companies. The deal will help finance the expansion of Kesko's supermarket and DIY hardware chains in Estonia and Latvia, and help it achieve its goal of increasing its shares of the countries' food retail and DIY hardware markets to 25 per cent.
The EBRD financing, which will play a key role in the company's investment programme, will primarily be used for the acquisition and development of real estate to support the expansion of Kesko's retail networks in Estonia and Latvia. The funds will also be used to establish an agro-machinery trade centre and a food distribution centre in Estonia.
Hans Christian Jacobsen, Director of the Agribusiness team at the EBRD, said the project will help modernise Baltic retailing and therefore benefit producers of local goods and consumers alike. Local producers of foodstuffs and building materials will gain greater access to the Baltic markets through Kesko's expanded retail networks, while consumers will gain greater access to a wider range of relatively higher quality and lower priced goods.
Kesko is the leading retail trading company in Finland and among the largest companies on the Helsinki Stock Exchange. Established in 1940, it operates throughout Finland and is now expanding its activities in the Baltic States as well as in the Scandinavian countries.
"Kesko has ambitious plans for the Baltic markets, which call for large amounts of capital, especially for the store network," said Juhani Järvi, Executive Vice President and Chief Financial Officer at Kesko. "The EBRD is an experienced and strong partner in this region, and can help us to meet our business goals in these growing and exciting markets."
The EBRD will syndicate €25.2 million of the loans to three commercial banks: Nordea Bank Finland plc, Sampo Bank and Pirma Banka NORD/LB Group.
To date the EBRD has signed 158 projects worth €2.5 billion in the agribusiness sector in its countries of operation.
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