powerpoint presentation · 2018-07-12 · croatian soes have a larger role but lower efficiency...

EBRD: Addressing Investment Readiness July 2018

Contents

Introduction to EBRD

EBRD in Croatia: Strategy

EBRD in Croatia: Instruments

Contacts

2

3

Introduction to

EBRD

EBRD in

Croatia:

Strategy

EBRD in

Croatia:

Instruments

Contacts

Who we are

4

EU 28

members**

63%

United States

of America

10%

Japan

9%

EBRD region

excl. EU

members***

7%

Others

11%

Shareholding Structure

** Includes European Community and

European Investment Bank (EIB) each at

3%. Among other EU countries: France,

Germany, Italy, and the UK each hold 8.6%

*** Russia at 4%

As at 31 December 2015

• International financial institution, promotes

transition to market economies in 38 countries

from Central Europe to Central Asia.

• The single largest investor in its existing region.

• Owned by 66 countries and 2 inter-governmental

institutions.

• Capital base of € 30 billion.

• 3,100+ staff in 64 regional offices.

Introduction to EBRD EBRD in Croatia: Strategy Contacts EBRD in Croatia: Instruments

5

Where we invest

6

Introduction to

EBRD

EBRD in

Croatia:

Strategy

EBRD in

Croatia:

Instruments

Contacts

29 June, 2018 7

EBRD in Croatia: Strategy

4%

19%

23%

55%

Energy

Fin. Institutions

Ind., Comm. &

Agrib.

Infrastructure

Portfolio Composition

• The EBRD is one of the largest investors in

Croatia with realized investments of over €

3.7 billion in 199 projects since 1994.

• The Bank has proved its commitment to

development of market oriented economy as

€ 2.50 billion (70%) of its realized

investments is comprised of private corporate

investments.

• Further, equity investments amount to more

than € 568 million (16%) of its realized

investments.

• In 2016 - 2017 the EBRD realized in total €

435 million investments in 28 deals.


EBRD’s Country Strategy 2017-2020

8

Deepening financial markets to broaden access

to financial instruments

Supporting private sector

competitiveness

Promoting commercialisation

of public companies

1

2

3

Policy dialogue aimed at:

• Fostering innovation, operational and resource efficiency;

• Improvement of the business climate and economic

inclusion.

• Continue to provide long-term funding;

• Blend financing with capacity building;

• Support development of financial market infrastructure to

enable expansion of new investment products.

• Support improvement of corporate governance,

operational performance and financial result of public

companies;

• Support increase of private sector participation in public

sector to increase operating efficiency of the companies.


EBRD’s

strategic

focus

9

Innovation can be supported by EU funds and

better institutional background Global Competitiveness Rankings 2016-17

Innovation (out of 138 countries)

• Gaps on innovation are driven by lower capacity for

innovation, government procurement of advanced

technologies and weak university-industry collaboration in

R&D.

Supporting private sector competitiveness Increased focus is put on innovation and economic inclusion

Sources: World Economic Forum Global Competitiveness Report 2016/17.

0

20

40

60

80

100

120

Capacity forinnovation

Quality ofscientific R&D

institutions

Company spndingon R&D

University-industry

collaboration inR&D

Govtprocurement of

advancedtechnologies

Availability ofscientists and

engineers

PCT patentapplications

Croatia CEE

Low labour market efficiency should be tackled

Global Competitiveness Rankings 2016-17

Labour Market Efficiency (out of 138 countries)

• Gaps are particularly large in effects of taxation on incentives

to work (134/138), capacity to attract (133/138) and retain

talent (132/138), and hiring and firing practices (128/138).

0

20

40

60

80

100

120

Flexibility ofwage

determination

Hiring and firingpractices

Redundancy costsweeks of salary

Effect of taxationon incentives to

work

Pay andproductivity

Reliance onprofessionalmanagement

Country capacityto retain talent

Country capacityto attract talent

Femaleparticipation inthe labor force

Croatia CEE


1

10

Deepening financial markets Financing should rather come in equity as indebtedness is too high

Sources: Own calculations based on BVD ORBIS.


Private sector indebtedness is high across

almost all sectors…

…with strong concentration at highly

overleveraged companies

• High indebtedness may constrain investment…

• …especially due to low profitability, limiting internal sources

for investments, and weak corporate credit growth

• Strong presence of highly overleveraged companies may

constrain lending and raise cost of financing through limiting

the range of creditworthy clients…

• …and may have strong negative spillovers on other companies

Private sector leverage

(debt to equity ratio, 2012-2014 average)

Corporate debt and debt of overleveraged companies

(€ bn)

0

2

4

6

8

10

12

14

Tra

nsp

ort

Const

ructi

on

Agri

Oth

er

serv

ices

Tra

de

Tota

l

Energ

y

Touri

sm

Uti

liti

es

Manufa

ctu

ring

Croatia CEE4 WB

2

11

CROATIAN SOES HAVE A LARGER ROLE BUT

LOWER EFFICIENCY THAN IN CEE PEERS…

SOEs are still an important part of the

Croatian economy... ...but they seem to work less efficiently than in

CEE

Assets of SOEs

(share in GDP, 2014)

Return on assets of SOEs

(%, 2012-2014)

Sources: Own calculation based on BvD ORBIS.

• Croatian SOEs are present in many sectors and usually

more prominently than in CEE4…

• …also in sectors where public interest or market failure is

less obvious (e.g. agribusiness or manufacturing)

• Revenue generating capacity of SOEs in Croatia is low by

regional standards

• Profitability, at 0.7 per cent ROA over 2012-2014, is

behind CEE peers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

B&

H

Cro

ati

a

WB

Pola

nd

Serb

ia

CEE4

Slo

vakia

Czech R

ep.

Hungary

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Czech R

ep.

Slo

vakia

CEE4

Pola

nd

Hungary

Cro

ati

a

B&

H

WB

Serb

ia


Promoting commercialisation of public companies Croatian SOEs have a larger role but lower efficiency than CEE peers

3

29 June, 2018 12

Introduction to

EBRD

EBRD in

Croatia:

Strategy

EBRD in

Croatia:

Instruments

Contacts

EBRD’s financial products

13

Equity and quasi-equity instruments

Loans

Guarantees

1

2

3

EBRD’s

instruments

• Long-term CAPEX, WC or balance sheet restructuring

financing;

• Senior, subordinated or convertible debt;

• 5-15 years maturity with fixed or floating rate;

…all usually in cooperation with other financial

institutions.

• Equity: Investments in minority shareholdings usually

to support further expansion of companies; and

• Quasi equity: Mezzanine financing to companies with

limited additional debt capacity.

• Trade facilitation programme – providing guarantees to

international confirming banks and taking political and

commercial risk of international trade transactions.


EBRD Policy Dialogue Initiatives

14

Well-

governed

• Corporate Governance Initiative for

companies listed on the Zagreb Stock

Exchange

• Identification of key barriers to NPL

resolution;

• SOEs Structural Reform Support Service

Economic

resilience

• New Capital Markets Law and Covered

Bonds Legislation

• SEE Link for supporting development of

regional capital markets and

infrastructure;

• Fund raising and trading platforms for

start-ups and SMEs (Funderbeam and

Progress).

Economic

inclusion

• Private Sector Youth Initiative;

• Support to Women in Business;

• Initiative with Young Farmers Association

for increasing competitiveness and youth

inclusion.

Competitiv-

eness

• Supporting local producers;

• Financial and operational improvement

programmes for state- and municipally-

owned companies.

• Support to improving Restructuring

Framework for SOEs

• Finalisation of Unified Reporting and

Monitoring Framework of SOEs

Main Policy Dialogue Initiatives


EBRD Activities in 2016 and 2017:

Debt and Equity Financing

15

Large corporates

financing

Reaching SMEs through

cooperation with FIs

Equity investments

Municipal and environmental

infrastructure

Supporting SMEs’

liquidity and trade

through intermediaries

Pula Retail Regeneration

Centre Contributing to expansions,

energy efficiency

improvements and

restructurings

Supporting operational

and environmental

improvement

First equity investment

in Croatia within fund

supporting SME

expansion (ENEF)

Supporting development

of new ways of financing

for municipally owned

companies

313

103

7

11

€ 435

million


EBRD Activities in Jan-May 2018:

Debt and Equity Financing

16

Jan-May 2018

investments

Equity investments,

€ 70 million

Reaching SMEs through

cooperation with FIs,

€ 19 million

Supporting further sector development through EBRD’s largest equity

investment in tourism in the East Mediterranean

• € 70 million equity investment into D-Marinas, a company majority

owned by Dogus Group managing 10 marinas in Croatia, Greece

and Turkey.

• Main goals of the projects:

– support further expansion of marina business in the respective

countries;

– support development of marina management services; and

– balance sheet restructuring / decrease in leverage.

• SME credit line

• Trade facilitation programme


Orbico:

Acquisition of Distribev

€ 20 million (matched by ZABA)

for the acquisition of the leading Polish

distributor.

The Project supported further expansion

of exports by Croatian and Bosnian

producers into Poland.

EBRD’s selected projects

17

Atlantic Grupa:

Acquisition of Droga Kolinska

€ 57.5 million (equity and

mezzanine)

as a part of larger financing package for

regional expansion, portfolio

diversification and creation of cross-

border synergies.

Calcit:

Production expansion

€ 10 million

supporting increase in production

capacity, improving energy efficiency

and expanding product range.

JGL:

WC financing

€ 20 million

long-term working capital financing to

complement the investment into the

new state-of-the-art production facility in

Rijeka – Pharma Valley

Aluflexpack:


€ 20 million

for the expansion of production facilities

in Croatia - implementation of new

technology and entering new market

segment.

AD Plastik:


€ 10 million

in Rouble equivalent to the Russian

subsidiaries of AD Plastik for the

expansion of production in Russia.


18

Introduction to

EBRD

EBRD in

Croatia:

Strategy

EBRD in

Croatia:

Instruments

Contacts

Contacts

Project Enquiries Business Development department t: + 44 20 7338 7168 e: [email protected]

EBRD, One Exchange Square London, EC2A 2JN United Kingdom www.ebrd.com http://www.ebrd.com/croatia.html

For all further enquiries, please contact:

Media Enquiries

EBRD Press Office t: + 44 20 7338 7805 e: [email protected]

21

Zagreb Resident Office Miramarska 23, 5th Floor 10000 Zagreb Croatia t: + 385 1 6000 310

mailto:[email protected]

http://www.ebrd.com/

http://www.ebrd.com/croatia.html

mailto:[email protected]

http://www.google.co.uk/url?sa=i&rct=j&q=ebrd&source=images&cd=&cad=rja&docid=aTy6XV0kVk7ZCM&tbnid=CxHy3R2BLlrLFM:&ved=0CAUQjRw&url=http://euobserver.com/opinion/115831&ei=EW3dUYLbOOqW0AWDgYGoCQ&bvm=bv.48705608,d.d2k&psig=AFQjCNEYaixv_3V1m1Gf4gdLi0FvhbY8eA&ust=1373551855427961

powerpoint presentation · 2018-07-12 · croatian soes have a larger role but lower efficiency...

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