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Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
FRIKOM DOO BEOGRAD
Date SPI disclosed
May 19, 2009
Projected board date
June 19, 2009
Invested: July 28, 2009
Signed: June 29, 2009
Approved: June 26, 2009
View Environmental & Social Review Summary (ESRS),
Frikom is a leading ice cream, frozen food and frozen pastry producer in Serbia. The company acquired in 2008 Nova Sloga, a former Serbian state owned mineral water, fruit and vegetable producer. The proposed project is for the corporate restructuring and modernization of Frikom, and for the post-privatization investments in Nova Sloga, to finance capital expenditures, expand fruit production, establish fresh vegetable purchasing, increase mineral water production capacity and improve efficiency.
Project sponsor and major shareholders of project company
Agrokor is a leading food and retail company in the CEE region, with 36,000 staff, and operations in Croatia, Serbia, Bosnia and Herzegovina, Macedonia, Montenegro, Slovenia and Hungary. Over the last thirty years, Agrokor has expanded from a small family business for flower and trade, into a €3.8 billion private company, owned 92% by Mr. Ivica Todoric, the founder and President, and 8% by EBRD.
Agrokor owns 95.83% of Frikom. The minority holding in Frikom is owned by the Serbian privatization fund (3.75%) and other small shareholders. Nova Sloga is 70% owned by Frikom, 15% by its workers, and 15% by the Serbian privatization fund.
Total project cost and amount and nature of IFC's investment
The total Project cost is estimated €40 million. The proposed investment is a €20 million A Loan and €20 million C Loan from IFC’s own account.
IFC investment as approved by Board
56.41 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
Nova Sloga is located in Serbia, in the Rasina area renown as rich agricultural area with over 160.000 hectares of arable land. Frikom ice cream and cold storage plants are located in Belgrade, Serbia.
Anticipated development impact of the project
The proposed project supports the continued regional growth of an emerging market player and also develops a local supply chain (raw material, packages, transport, etc) from regional farmers in fruit and vegetable production.
-Private Sector Development: Support privatization, rehabilitation and improve the productivity of formerly state-owned assets;
-Employment: Safeguard Nova Sloga’s employment, including a large number in rural areas;
-Farmer benefits: Strengthen the competitiveness of vegetable supply chain by providing reliable access to market and technical assistance to farmers;
-SME development: companies like Frikom and eventually Nova Sloga after its turnaround are the local engines of supply chains, upstream supporting farmers by providing a reliable off-take of fruits and vegetables, and downstream by supplying retail and distribution networks.
-Tax-payer benefit: Increase taxes paid and decrease in state support to a loss making state-owned enterprise;
-Quality Management Certification: Improve E&S management and quality certification.
IFC's expected development contribution
-Privatization support: IFC’s financing would support Frikom’s recent privatization purchase of Nova Sloga and further transfer of the Group’s training and management practices throughout the organization;
-Long-term partnership and South-South investment: the proposed project would expand IFC’s role beyond the financing of Croatian livestock and meat processing operations, to finance frozen food, fruit and vegetable production, and mineral water business in Serbia.
-Counter-cyclical financing: IFC is one of the few financial institutions that are, under current market conditions, able to provide 5-7 years financing;
-Environmental and Social standards: IFC’s involvement in the Project would help Agrokor scale up sustainable E&S practices and disseminate best practices to another core business of the Group in another country.
Environmental and social issues - Category B
This Category B project has limited impacts that will be resolved through the application of good international industry practices, the Environmental Action Plan and IFC performance standards and applicable sections of EHS guidelines. Apart from upgrading wastewater treatment systems, there are unlikely to be significant issues associated with Frikom's frozen food, pastry, ice cream and bottled mineral water plants. Frikom’s production facilities in Serbia are ISO 9001(Quality Management) and Hazard Analysis of Critical Control Points (Food Safety) certified to Codex Alimentarius. Further strengthening of food safety in field and processing activities, occupational health and safety and resolution of incomplete wastewater treatment are addressed in the environmental action plan (EAP).
For inquiries about the project, contact:
Main Sponsor Contact
Ivan Crnjac, Executive Vice President for Strategy and M&A
+385 1 48 94 682
+385 1 48 94 089
Trg D. Petrovica 3
10000 Zagreb, Croatia
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Local access of project documentation
The environment documents will be made available in publicly accessible locations within the towns of Belgrade and Trstenik. An advertisement will be published in local newspapers indicating where the documents may be obtained.
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