The EBRD is considering an operation in favour of the European Fund for Southeast Europe (the “Fund” or “EFSE”), an investment company with variable capital (“SICAV”) incorporated in the Grand Duchy of Luxembourg. The operation will consist of the investment of EUR 25 million (or the USD equivalent amount thereof) in A-shares of the Fund. The operation will enable the Fund to continue providing medium to long-term funding to qualified financial intermediaries, for on-lending to micro, small and medium-sized enterprises (“MSMEs”) and for rural, housing and agricultural finance in Southeast Europe and the European Neighbourhood Region.
Transition Impact of the Proposed Investment are:
(i) Support to markets: By providing the additional funding the Bank will help the Fund manager attract new commercial and private funding in new regions with a focus on MSME lending. Additional investment in EFSE’s A-shares will help maintain the cushion for private note holders and provide comfort for their investment.
(ii) Enhancing business standards and practice: Under the proposed investment, EBRD is engaging in dialogue with EFSE to move focus to local currency lending where possible. EFSE’s technical assistance funded from its income and donors is tailored to the specific needs of partner institutions and will contribute to the improvement of corporate governance, business practices, and operational efficiency, which will be duplicated by other participants in the financial sector. EBRD investment in the Fund also promotes the development of MSME funding vehicles.
The Fund was promoted by KfW and established with the support of EBRD and other international financial institutions (“IFIs”) in December 2005 to provide loans to financial institutions for on-lending to MSMEs. The Fund has been managed by Oppenheim Asset Management Services S.a.r.l., (OPAM), a wholly-owned subsidiary of Deutsche Bank since 2010 with investment operations delegated to Finance in Motion (FiM), a company established in 2010 by staff of the Frankfurt School of Management and Finance.
Investment in A-shares of the Fund to support the expanding activities of EFSE and help leverage private financing with long-term, continuing IFI support.
EUR 25 million (or the USD equivalent amount thereof).
Categorised FI. Local banks funded by EFSE will need to implement environmental procedures and require that sub-borrowers comply, at a minimum, with national standards for environment, labour, and health and safety standards. EFSE will provide annual environmental and social reports to the Bank.
Sylvia Wisniwski, Managing Director
Finance in Motion GmbH Theodor-Stern-Kai 1, 60596 Frankfurt/Main, Germany
t: +49 (0) 69 977 876 50-50 f: +49 (0) 69 977 876 50-10
E-mail: s.wisniwski @finance-in-motion.com
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