EBRD is lending €50 million to Konzum, the leading retailer in Bosnia and Herzegovina (BiH), to help the company strengthen its capital base and create modern stores throughout the country.
Konzum is owned by Croatia’s Agrokor, the largest agribusiness company in south-eastern Europe operating in the food retail and food and beverage sectors. With this EBRD support, Konzum will be able to restructure its balance sheet and expand its retail network by opening new centres in smaller towns of the country.
EBRD will syndicate €25 million of the loan under an A/B structure, while the remaining €25 million will be retained on the Bank’s account. Agrokor will match EBRD’s investment into its subsidiary by increasing its capital in Konzum by €7 million.
The retail market in BiH is still underdeveloped and fragmented with only 10 square meters of retail area per 1,000 inhabitants compared to the EU average of 270.
“This project will help Konzum consolidate its position as a market leader by expanding its retail network in areas of the country where modern stores are not currently present. It will also promote high quality standards of services and goods throughout Bosnia and Herzegovina. The EBRD is pleased to support Konzum by providing long-term finance for its development plans, which is particularly scarce in BiH in current tight credit market.”, EBRD’s Business Group Director for Russia, Agribusiness and Property and Tourism Alain Pilloux said.
"With this project the EBRD has once again acknowledged its confidence in Agrokor’s strategy as well as its strong support to the region’s further development. With EBRD as partner Agrokor shall continue to provide even stronger support to improving the economy in Bosnia and Herzegovina by investing in the underdeveloped retail sector, implementing global business standards, by know-how transfer and most importantly, by creating partnerships with local suppliers. Hence this investment shall also strengthen the local industry, generate employment and increase the standard of consumers,” said Ivan Crnjac, Executive Vice President of Strategy and Capital markets at Agrokor.
EBRD has a long standing cooperation with Agrokor. In 2006 the Bank made an equity investment of €110 million and became a shareholder of Agrokor. In October 2008 the EBRD offered a €70 million loan to another Agrokor’s subsidiary, Serbian food retailer Idea, in order to help the company develop modern retail centres in the smaller towns of Serbia.
In the agribusiness sector, the EBRD has directly committed more than €5 billion in over 340 projects across central and Eastern Europe and the Commonwealth of Independent States.
The EBRD is the largest institutional investor in Bosnia-Herzegovina. To date the Bank has provided around €1 billion in 75 various projects in the country, which attracted additional investments worth more than €2.5 billion.