The EBRD is boosting support to the Serbian agricultural sector with new financing for the country’s leading agribusiness operator to expand its production and increase energy savings.
A €80 million loan will provide MK Group and its subsidiaries with long-term financing for its agricultural activities and improvements in environmental standards.
In particular, the funds will be used to help MK Group and its trading arm MK Commerce to build up their farming operations. Ten million euros of the funds will be invested in an equipment upgrade at Sunoko, a local sugar producer, and this is expected to result in reduction of CO2 emissions and thermal consumption.
The EBRD will provide up to €40 million of the total financing, while the remaining amount will be syndicated with international commercial banks.
With over 20 years in the local agribusiness market, the privately owned MK Group focuses mainly on primary agriculture and sugar beet processing as well as soft commodity trading. Farming a land bank totalling 18,000 hectares, the company also provides seeds, fertilisers and other operational support to local farmers cultivating 200,000 hectares of land.
Accounting for over 20 per cent of Serbia’s GDP, agriculture is one of the key sectors of the economy and a significant component in the country’s trade with the European Union, placing it among the largest exporters of agricultural products in the region.
“In the aftermath of the financial crisis, primary agriculture and sugar processing have been deeply affected by working capital constraints. The investment will provide MK Group with a stable financing platform and funds for energy efficiency measures. The project will also contribute to greater productivity in the Serbian farming sector, enhancing competition and setting higher environmental standards,” said Gilles Mettetal, the EBRD’s Director for Agribusiness.
As the EBRD’s first syndication loan in Serbia after the global financial crisis, the project also marks the second transaction between the Bank and MK Group. In 2007, the EBRD provided a €10 million loan to Agroinvest, part of MK Group, to support primary agriculture development in Ukraine.
“Built on our continuous cooperation with the EBRD, the new loan will help MK Group to meet its working capital needs. Importantly, it will enable our company to extend our farming operations and suport to local primary producers, also contributing to ‘greener’ performance across the sector. The EBRD's involvement will also reinforce our efforts in raising capital on international markets,” said Miodrag Kostic, President of MK Group.
Since the beginning of its activity in Serbia, the EBRD has committed over €2.5 billion in various sectors of the country’s economy, of which almost €600 million occurred in 2010.
In the agribusiness sector alone, the EBRD has directly committed more than €6 billion in over 420 projects across central and eastern Europe and central Asia since 1991.
