Korzinka Equity Investment

Location:

Uzbekistan

Project number:

50054

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

11 Dec 2019

Status:

Passed Final Review, Pending Board Approval

PSD disclosed:

21 Nov 2019

Translated version of this PSD: Russian

Project Description

An equity investment of up to US$ 40 million in favour of Anglesey Food LLC, the leading grocery retail chain in Uzbekistan operating under Korzinka and Korzinka Discount brands (the "Company").

Project Objectives

The EBRD's investment will support  the Company's investments into i) the expansion its stores; ii) the upgrade of IT infrastructure and management information systems; and iii) the improvement of operational and corporate governance standards to bring them in line with the best international practice. 

Transition Impact

The project's transition impact will stem from "well-governed" and "competitive" qualities. The Company will implement a corporate governance action plan that will enhance its corporate structure and practices and a value creation plan that will enable the Company to increase its scale, competitiveness, efficiency and profitability.

Client Information

ANGLESEY FOOD LLC

Anglesey Food LLC, the leading grocery retail chain in Uzbekistan.

EBRD Finance Summary

USD 40,000,000.00

Total Project Cost

USD 50,000,000.00

Environmental and Social Summary

Categorised B (2014 ESP).  The environmental and social risks associated with the expansion of existing retail outlets network are expected to be site specific and can be managed via the implementation of appropriate mitigation measures. The Environmental and Social Due Diligence (ESDD) was carried by an independent consultant and involved a review of documentation and site visits to the selected stores, logistics facilities, and suppliers of fruit and vegetable, as well as an external labour risk assessment of company's local suppliers that deal with textile garments produced from locally sourced cotton.

ESDD confirmed that company's environmental, health, safety and social (EHSS) management system is generally effective and compliant with the national E&S regulations and the EBRD PRs. Company holds ISO 9001 and FSSC 22000 certification for its head office and uses an integrated quality and food safety management system.The Project is associated with some temporary short-term impacts related to the construction of new stores that can be mitigated through adequate control measures. No involuntary land acquisition or resettlement will be required for the project; all land plots necessary for new stores and associated facilities will be acquired through commercial means. 

The external labour risk assessment carried out for all local suppliers identified the need to make improvements to the company's supply chain risk management system. Those suppliers where FL/CL risks will be identified will be replaced with other local suppliers that will be subject to a labour risk assessment process to ensure that the suppliers has no FL/CL risks in its supply chains. For new suppliers that deal with locally sourced cotton, the client will carry out a labour risk assessment and submit its results to the EBRD. With the assistance from the EBRD, the company will also develop a monitoring system of its local suppliers that will enable the Bank to track client's suppliers sourcing areas and ensure no FL/CL risks are present in company's operation. The company will be expected to report to the Bank on any material changes in its supply chains related to the textile garments produced from locally sourced cotton.

The ESAP was agreed with the company to structure the project to meet the Bank's PRs, including requirements related to the fire safety prevention measures and reporting, management of workers' health and safety as well as labour risks in company's supply chains. Their EHSS management system will be further expanded to adequately address potential E&S risks associated with company's fast growing operations, including appointment of dedicated environmental manager and focal points responsible for labour aspects of client's supply chains. The Stakeholder Engagement Plan (SEP) includes requirements for public engagement throughout the project implementation period, including a grievance redress mechanism. The Bank will monitor the project through the agreed reporting arrangements, including site visits, as appropriate.

Technical Cooperation

Financial due diligence (under the TC Programme for Improving Financial Reporting and Management in the Corporate Sector), commercial due diligence (under the Sustainable Food Retail TC), supply chain risk assessment and development of corporate governance action plan were funded by the EBRD Shareholder Special Fund (SSF).

Company Contact Information

Mr. Malik Karimov
m.karimov@korzinka.uz

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.