The provision of an up to USD 100 million loan to the Novus supermarket chain for the expansion of its network of stores, for the upgrade of its logistics infrastructure with the construction of a logistics centre in Kyiv.
The Project will allow Novus to increase its customer base and scale up its operations. In addition, the construction of a logistics centre will allow the Company to increase its centralisation ratio and achieve greater efficiency and to meet the future demand from an expanded network of stores. These investments will enhance the Company's operating profile, and should sustain its positive operating and financial performance.
ETI score: 60
Transition impact of the Project is expected to stem from the following:
i Green quality: The Bank will support the adoption of sustainable construction principles for the new own distribution centre (the "DC") through the identification and assessment of cost-efficient measures leading to energy savings, the implementation of energy management systems and overall improvement of the environmental footprint. The DC is expected to be certified under BREEAM "Good". The project also envisages investments into energy efficiency technologies for the new stores.
i Competitive quality: The commissioning of its own distribution centre and the implementation of an innovative packaging technology will lead to improvements in the client's operational and logistics efficiency via cost savings, better stocks management and higher centralization of the supplies.
NOVUS UKRAINE LLC
Novus is a leading Ukrainian food retailer, mainly active in Kyiv and the Kyiv region. The Company has a multi-format strategy, and currently operates about 50 modern food retail stores mainly in the "supermarket" format with total trade area of over 100,000 m2. Novus offers a wide assortment of up to 40,000 different products and over 3,000 brands supplied by over 800 suppliers, mostly from Ukraine. The Group's strategy is to offer a wide variety of goods and deliver high quality service to consumers.
EBRD Finance Summary
Provision of an up to USD 100 million equivalent senior secured long-term loan, to be potentially syndicated.
Total Project Cost
In relation to the Project's financing structure, the Bank will provide a tailor made financing package, which suits the proposed investment project and the Company's needs. It includes a relatively longer than-average tenor, which is necessary to structure the project. Similarly, the Bank will aim to mobilize additional financial resources, and will seek to syndicate part of the loan amount. In addition, the Bank will support the Company in achieving higher standards, namely in relation to energy and resource efficiency and climate resilience.
Environmental and Social Summary
Categorised B (ESP 2019). Key environmental and social issues associated with the operation of a supermarket chain include site selection and development, occupational and public health and safety, labour management issues, energy and resource efficiency, waste management, and supply chain management. Novus is an existing client of the Bank, has successfully completed one environmental and social action plan, and is currently implementing a second covering a wide range of issues typical for supermarket chains. E&S due diligence on previous projects has included meetings with Group staff and site visits to sample supermarkets and, to date, the Group has proven to be responsive and progressive. Due diligence for this follow-on project was undertaken by ESD and included a review of current annual reporting, previous due diligence undertaken, ESAP implementation progress, and discussions with Group management on plans for the new logistics centre.
The distribution centre will be located to the west of Kyiv, in the southern part of the Svyatoshyn district. The distance to the Kyiv by-pass road is about 0.5 km and the distance to airport Kyiv is about 1 km. The site is currently owned by the municipality and is surrounded by a mixture of industrial and service enterprises and residences. Key issues to consider are the potential impact of both construction and operation on businesses and residences particularly from the construction process, increase of traffic flows and consequent need to modify and infrastructure. The project has been subject to local requirements for environmental impact assessment (EIA) and the EIA is completed and the required release for public comment has been completed. The Construction Permit has been issued. Again, the Group has demonstrated a proactive approach and have undertaken consultations with a range of stakeholders and have modified their plans accordingly to take account of potential impacts. This includes a commitment not to utilise roads passing through residential areas for access to the logistics centre. The aim to achieve BREEAM Good certification is noted as are the consequent environmental benefits.
With regard to the development of new stores, the policies and procedures demonstrated in the context of previous projects are adequate to ensure that new stores are developed in accordance with best practice in the retail sector and with the Bank's Performance Requirements. The Group will need to continue to implement the currently agreed ESAP, ensure that new development are designed, constructed and operated in accordance with the PRs and provide the Bank with annual environmental and social reports.
Technical Cooperation and Grant Financing
The Japan-EBRD Technical Cooperation Fund will partially cover the Project's external legal costs.
TC funds provided by the EBRD Shareholder Special Fund will cover in-depth audit of the horticulture department of the retail chain.
TC funds provided by EU Neighbourhood Investment Facility under FINTECC Programme will cover costs for support implementation of sustainable construction principles for distribution centre.
Company Contact Information
+380 (44) 585-41-70 585-41-71
Stepana Bandery Avenue, 26, Kyiv, 04655, Ukraine
PSD last updated
03 Jul 2020
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Independent Project Accountability Mechanism (IPAM)
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