Laona Equity II

Translated version of this PSD: Ukrainian

Project Description

The proposed project is a follow-on equity investment. It is designed to support Laona in financing an upgrade and expansion of their logistics facilities, as well as the development of a loyalty program for pharmacies.

Transition Impact

The transition impact and demonstration effects associated with this potential investment are expected to include:

• Demonstration of new products and processes
• Market expansion via the development of a loyalty program for pharmacies;
• Setting standards for corporate governance and business conduct.

The Client

Laona Group is a large Ukrainian pharmaceutical wholesale and retail operator. Alba Ukraine is the main operating company of the Group and is a top-three pharmaceutical wholesale distributor in Ukraine.

EBRD Finance

Share capital increase of up to USD 14.5 million of Laona Public Company Limited.

Project Cost

US$ 36.1 million.

Environmental Impact

The project is Categorised B. Potential adverse environmental and social impacts associated with Client’s pharmaceutical wholesale and retail operations in Ukraine are site specific and can be readily identified and addressed through mitigation measures. The Bank’s Environmental and Social Due Diligence (ESDD) of the original project was carried out by independent consultant in 2010 and included a corporate E&S audit of the Company’s operations, based on documents review and site visit to operational facilities in Boryspil/Kiev. ESDD identified a need to develop environmental and social management system, address waste management issues, replace ozone depleting Freon containing cooling equipment, enforce Personal Protective Equipment use by the staff and obtain necessary local permits. These requirements were included into the E&S Action Plan (ESAP) and the Company is on track with implementing them, as per provided E&S annual report for the original project.

For the new Project, the existing ESAP will be updated to be in compliance with EBRD’s Performance Requirements and will be agreed prior to the first disbursement. Special focus will be given to local permitting and land acquisition process, as well as information disclosure.

The current operations are not associated with any major environmental impacts as the Company has no production activities, being involved only in storage and distribution of ready pharmaceuticals. Key sources of air pollution are related to use of road transport for deliveries to Clients and own pharmacies (hydrocarbons, heavy metals, COx, dust), emissions from gas boilers (COx, NOx, dust) and cooling equipment (freon). The main source of solid waste is packaging from raw materials that come in bulk and from Company’s own packaging processes.

The social issues are mainly related to maintaining the existing high level of occupational health and safety, labour conditions, as well as pharmacovigilance of the products ensuring their safety for consumers and appropriate recall mechanism. OHS risks are low-medium as the processes are highly automated with limited manual work involved. The existing ESAP will be updated to include provisions for formalisation of product recall mechanism to improve communication with the public.

The Company will continue to provide the Bank with Annual Environmental and Social Reports (AESR) and notify on any material accidents or incidents. The Bank will evaluate the Project’s environmental and social performance in accordance with the Bank’s PR’s through reviewing the Client reporting and undertake periodic monitoring visits.

Technical Cooperation

None.

Company Contact

Olga Prikhno
Chief Financial Officer

Tel. +38 050 312 58 22
E-mail: OPrihno@alba.kiev.ua

 

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