EBRD in 4.6 billion rouble loan to Russian retailer Lenta

By Richard Wallis

The EBRD signed an eight-year loan agreement under which it will provide 4.6 billion roubles to Lenta, one of Russia’s leading hypermarket operators.

The loan will support financing of both Lenta’s regional expansion (including construction of two new distribution centres) and significant sustainable resource investments in both existing and new stores. Lenta will have 24 months to draw down the funds.

The EBRD Special Shareholder Fund financed a resource efficiency audit which was used in setting out Lenta’s investments in this area. Lenta’s planned investments will include the introduction of more efficient refrigeration and lighting methods and a programme of advanced waste management, waste water treatment and water purification in many of Lenta’s existing and new stores.

The energy consumption of Lenta’s operations is expected to materially decrease as a result of the efficiency programme. In pushing through this programme to make better use of resources, Lenta will set an example for the rest of the industry as retail facilities, particularly ones selling food, are energy intensive due to the need for bright lighting, air conditioning and food refrigeration.

Lenta opened 31 stores in 2013 and expects to maintain an accelerated pace of expansion in the coming years. Lenta’s continued expansion is expected to be financed by the company’s operating cash flows and available financing facilities, including the new loan from the EBRD.

Alain Pilloux, Managing Director at EBRD, said: “We are pleased to strengthen our partnership with Lenta, a Russian company with high financial transparency and corporate governance standards, as it continues its expansion across Russia’s regions.”

“What is notable is that over half of the EBRD loan is ear-marked for investments in areas such as energy efficiency and water purification, aimed at making Lenta’s use of these essential resources more sustainable,” Mr. Pilloux added.

Jan Dunning, CEO of Lenta, said: “We value the EBRD as a strong and supportive partner that has contributed both expertise and capital to Lenta over the years. This new loan facility is important to Lenta as it further extends and diversifies the company’s sources of financing for expansion, contributing to Lenta’s growth as well as supporting further efficiency improvements and industry-leading sustainability standards.”

The EBRD is Lenta’s second biggest shareholder, with other key shareholders being TPG Capital and VTB Capital. The EBRD has two nominees on the company’s Board of Directors.

In the agribusiness sector alone the EBRD has directly committed over €6.4 billion in over 420 projects across central and Eastern Europe and the Commonwealth of Independent States since 1991. The relevant EBRD agribusiness figures for Russia in that same period are over 70 projects totalling €1.9 billion.