EBRD invests in leading dairy producer in Bulgaria

By Ina Coretchi

The EBRD is supporting one of the leading Bulgarian dairy producers in its drive to optimise operations and diversify production.

The Bank is providing a €5.5 million mezzanine loan to Fama, Bulgaria’s third largest manufacturer of milk products, to finance the company’s investment programme.

The Bulgarian dairy market remains highly fragmented. With the EBRD support, Fama will increase its competitiveness, boosting the development of the local dairy industry.

The project will enable Fama to expand its market share by building its own distribution network in Varna, Sofia and Plovdiv, the company’s largest regional markets. The company will also launch the production of added value products, such as long-life milk, while outsourcing low-margin products.

In addition, the EBRD funds will help Fama to refinance its short and medium-term loans, strengthening its balance sheet.

GED Eastern Fund II, the private equity fund which owns Fama, is co-financing the project with additional €2.5 million.

“This project will assist Fama in becoming a strong and efficient market player. It will boost the competition in the Bulgarian dairy sector and improve the company’s linkages with suppliers and distributors, while bringing higher quality products to consumers,” said Peter Bryde, EBRD Deputy Director for Agribusiness.

“Fama will be able to optimize operations and increase its production, adapting to new market conditions. The dynamics of the raw milk supply during the last two years created new challenges for both farmers and dairy producers. The project will support the whole value chain of the business and further development of the quality dairy market in Bulgaria.” said Mr. Robert Luke, President of Board of Directors of Fama.

Since the beginning of the EBRD operations in Bulgaria, the Bank has committed close to €2 billion in more than 120 projects in key sectors of country’s economy, mobilising additional investment worth more than €6.7 billion.

In the agribusiness sector, the Bank has directly committed more than €5 billion in over 340 projects across central and eastern Europe and the CIS.