Direct Finance Framework SME

Location:

Regional

Project number:

47420

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

C

Approval date:

08 Apr 2015

Status:

Approved

PSD disclosed:

13 Mar 2015

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

The Direct Financing Framework SME (DFF SME) allows the EBRD to offer finance directly to small and medium-sized enterprises in all of its countries of operations for projects of up to EUR 25 million.

The DFF SME was created in 2015 by merging the following four facilities: 1) the Direct Investment Facility; 2) the Direct Lending Facility; 3) the Local Enterprise Facility; and 4) the Medium-Size Project Facility.

Project Objectives

The DFF SME provides the Bank with an integrated instrument covering all of its countries of operations to meet the growing business needs of local small and medium-sized enterprises currently not sufficiently supported by other financing sources. The proceeds from the Bank's financing are typically used for financing acquisitions, expansion and/or modernisation investments, efficiency improvements as well as working capital.

The DFF SME offers a range of financing instruments (debt, quasi-equity and equity), which are frequenty combined with advisory support and occasionally with other donor supported programmes (e.g. the SME Local Currency Programme and the Value Chain Competitiveness Programme).

Transition Impact

ETI score: 60

Transition impact is expected in the following key areas:

  • Setting high standards of corporate governance, business conduct and financial reporting. Projects would help set standards ranging from financial management to energy efficiency or environmental standards. These standards would set an important example in the relevant industry or country.
     
  • Demonstration of new products and processes of restructuring of local enterprises. This will help to increase competitive pressure in the market and encourage the wider adoption of modern production technologies or management practices.

Client Information

Local private enterprises operating in all EBRD countries of operations.

EBRD Finance Summary

EUR 150,000,000.00

EUR 150 million (for the 12 months following the date of Board approval) to provide a wide range of flexible financing instruments (equity, quasi-equity and debt financing) to local enterprises.

Total Project Cost

EUR 150,000,000.00

It is expected that additional EUR 100 million of project costs will be financed from internally generated cash flows or other sources.

Additionality

The additionality of the DFF SME usually derives from the following sources:

1) Terms: (i) tailor-made financing instruments; (ii) availability of equity and quasi-equity financing in markets where private equity funds are not present and (iii) advisory support through local consultants or international advisers.

2) EBRD attributes: (i) EBRD's international financial institution status makes it a reliable partner for local SMEs; (ii) Ability to blend finance and advisory services and design financing programmes that are tailored to the needs of the local SMEs; (iii) Ability to engage in policy dialogue on key matters relevant for the SMEs and their operating environment. 

3) Conditionalities: The Bank's policies and practises encourage clients to apply higher standards to (i) corporate governance and business conduct (improving financial reporting standards etc.), and (ii) environmental standards (implementation of ESAP and other environmental covenants).

Environmental and Social Summary

Sub-projects financed through this framework will be categorised and appraised on a case-by-case basis in accordance with the Bank's 2019 Environmental and Social Policy. Where the Bank is investing in projects or companies that present a potentially higher environmental and/or social risk, commensurate studies will be carried out with assistance from external consultants to fully understand all related liabilities and risks associated with a company's operations, as well as to develop and agree upon an environmental and social action plan as required. Further, the environmental and social due diligence undertaken on a case by case basis will look to identify and/or confirm potential environmental and social benefits to be realised through the delivery of the projects. Target borrowers/ investee companies will be required to comply with the Bank's Performance Requirements and provide the Bank with an annual report on environmental and social issues.  

Sub-projects financed through this framework are not subject to Board approval. PSDs will be released on a project-by-project basis including summary information on the sub-project's significant environmental or social issues and agreed mitigation measures. "Category A" projects are not eligible for delegated approval under the DFF SME.

Technical Cooperation and Grant Financing

The Direct Finance Framework SME will continue benefiting from Technical Cooperation funds raised from a multitude of donors.

Company Contact Information

Claudio Viezzoli
viezzolc@ebrd.com
One Exchange Square, EC2A 2JN, London, the U.K.

PSD last updated

19 Jun 2020

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out how to submit a Request for review through our confidential online form, by emailmail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requesters’ identities may be kept confidential, upon request.

 

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