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EBRD backs leasing for mid-sized Russian mining, construction firms
Caterpillar's Russian clients to get $12 million financing
The European Bank for Reconstruction and Development is teaming up with Caterpillar Inc., the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines, and Raiffeisenbank Austria, Moscow, to set up a $12 million pilot leasing facility that will give the US firm's medium-sized Russian customers access to a flexible form of financing.
The EBRD, part of whose strategy includes promoting the development of leasing, is lending $8 million to Raiffeisen-Leasing, Moscow, Raiffeisenbank's Russian leasing arm so that Russian firms operating in the mining and construction industries can access modern equipment despite the country's traditional shortage of longer-term funding. Raiffeisenbank itself will put up the other $4 million.
The EBRD believes the risk-sharing formula embodied in the Caterpillar leasing facility will serve as a model that can be replicated in various sectors of Russia's economy and spread to the Bank's other countries of operation, Dmitry Toulin, EBRD Senior Adviser, said at a signing ceremony in Moscow.
"This leasing facility further contributes to Caterpillar's efforts to ensure our customers in the CIS have competitive financing to help them obtain the equipment and solutions they need to succeed," said James Tevebaugh, Caterpillar's CIS Managing Director.
This is the second leasing facility the EBRD has signed in Russia where this form of financing is still being tested, although the number of leasing companies is expanding fast. In February, the EBRD committed to lend $10 million to Russia's leading provider of leasing services to small and medium-sized enterprises, DeltaLeasing, a wholly owned subsidiary of the US-Russia Investment Fund.
Caterpillar customers cleared to participate in the scheme will typically have to make a down payment equivalent to between 15 per cent and 35 per cent of the value of the equipment being leased. Lease tenors will normally average three years, although they can go up to five years. The value of the leased equipment can be from $500,000 to $5 million.
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