Project description
and objectives:
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The EBRD will provide up to USD 23 million in equity and debt to the Gallery
Group, one of the leading advertising media operators in Russia. The loan will
provide acquisition and capex funding and facilitate the expansion of the
Group’s geographic coverage and product range, while improving its capital
structure.
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Transition impact:
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The proposed project will further develop an essential and efficient outdoor
advertising infrastructure in Russia, while supporting consolidation of a
fragmented industry. In particular, the proposed project will support an
operator that provides services in the Russian regions, thereby supporting the
development of regional commerce. It will also have a high demonstration
effect by supporting an entrepreneurial domestic company without a foreign
sponsor and would provide an even playing field for competitors in the
sector. By providing debt and equity financing to the Group, which was
previously relying mostly on its internally generated cash to meet its
financing needs, the EBRD will send a signal of the Bank’s confidence in the
Group and Russia’s advertising market.
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The client:
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Gallery Group (“Gallery” or the “Group”), founded in 1994, currently operates
the second largest outdoor advertising network in the Russian regions (Russian
Federation excluding Moscow and St. Petersburg, based on net revenues and
number of outdoor advertising sites) and covers 200 cities, with proprietary
installations in 26 cities. The Group is indirectly owned by three
individuals: Anatoly Mostovoy, founder and CEO, Vladislav Zakharovsky, General
Director and Yuri Mostovoy.
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EBRD finance:
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The Bank’s proposed financing will consist of up to USD 5 million in the
Group’s holding company, and up to USD 18 million in debt for the Bank’s own
account to Gallery-Service LLC, a key operating company in the Gallery Group.
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Total project cost:
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The total project will consist of up to USD 5 million in equity and up to USD
18 million in debt, which along with internally generated cash will fund
approximately USD 32.2 million of acquisitions and capital expenditure.
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Environmental impact:
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This Project was screened C/1.
There are unlikely to be any significant environmental issues associated with
this project. Main issues associated with outdoor advertisement business are
visual effects and compliance with statutory and other outdoor advertising
requirements. Environmental due diligence conducted has shown that apart from
standard land use planning requirements, permits and the planning and
installation of advertising units, there are no environmental issues
associated with this business.
The Group also confirmed that its operations are in full compliance with the
Advertising Committee and relevant municipal bodies' specifications and
standards associated with the Russian outdoor advertising industry. The Group
is required to continue to comply with Russian and EU environmental, health
and safety standards and requirements and local and national public
consultation requirements as well as to submit the Bank an annual
environmental report.
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Technical
cooperation:
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None.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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Mr. Anatoly Mostovoy, CEO
Gallery Group
Prospect 60th Year of
October Number 9, Building 2
117312 Moscow, Russia
E-mail: mostovoy@outdoor1.ru
Web-site: http://www.outdoor1.ru
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EBRD contact:
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Hrvoje Crnogorac, Operation Leader: crnogorh@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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