EBRD one billion rouble loan for Russia's Monetka retail chain

By Anthony Williams
@ebrdtony

The EBRD has signed a loan agreement under which it will provide 1 billion roubles (equivalent to EUR 24 million) to Russia's Monetka retail chain, mainly to fund a major upgrading of its logistics infrastructure.

The seven-year senior secured loan will finance the construction of the second phase of a modern distribution centre in Ekaterinburg, as well as the opening of a distribution centre in the northern part of the Urals. This is Russia's industrial heartland where Monetka has grown from a small scale venture into the leading multi-format retailer over the last 10 years.

Part of the EBRD funding will also help Monetka expand its truck fleet and thus improve the chain's distribution system. Both these projects are crucial to supporting the chain’s regional expansion and optimising costs and logistics. In addition, new stores will be fitted with the modern equipment utilizing the latest energy efficiency technologies. These improvements will cut both energy consumption and respective costs.

Monetka, a privately-owned domestic food retailer which opened its first store in 2001, now employs over 8,200 people, mainly in Russia&rsqs Urals and Volga regions. Its chain includes two hypermarkets, 21 supermarkets and 191 discount stores.

The company's goal is to achieve leadership in the lower to medium price retail segment in a country where, since the crisis, consumers have become extremely price conscious. In 2009, the food retail turnover in Russia totalled just over seven trillion roubles (USD 222 billion).

As Monetka pursues a policy of diversification across formats, the key to its expansion strategy is a plan to penetrate small provincial towns with a population of less than 20,000 where modern food retail outlets are underdeveloped or as yet wholly absent.

In April 2008, the EBRD raised USD 60 million for this leading regional retailer, two-thirds of it through a syndicated loan. The maturity of the EBRD’s USD 20 million A loan is seven years while that of the USD 40 million syndicated A portion is six years.

In the agribusiness sector alone, the EBRD has directly committed over €6 billion in over 420 projects across central and eastern Europe and the Commonwealth of Independent States since 1991.