ceo conference 2019 · sme pre-listing support –for smes with high potential for a successful...

CEO Conference 2019

Mark Davis, EBRD

November 2019

29 November, 2019 2

EM Equity Fund Flow by TypePercent of Assets Under Management, 2018

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EM equity fund flows by type, % of AUM, 2018

Romania: FDI per Capita is Low

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Romania: Private Credit to GDP is Low, but…

29 November, 2019 5

Credit Growth has been led by Local Currency

Lending

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Defensive Capital is Offensive Capital

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➢ If you believe in your business prospects

➢ Raise term capital (debt and equity) while investors are willing

➢ Build investor base, yield curve, liquidity if public,

➢ Shore up balance sheet for market disruptions

➢ Establish access to capital for non-organic growth

➢ Strong investor relations and robust capital structures are powerful

➢ Trade Finance

➢ Local Commercial Bank Credit

➢ Syndicate Loans

➢ Bonds

➢ Private Equity

➢ Public Equity

➢ Hedging where possible and cost effective to avoid carry trades and reduce

disruptive event impact

What is the EBRD?

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• An international financial institution, with the

mandate to promote transition to modern and

well-functioning markets in more than 35

countries from Central and Eastern Europe,

Caucasus, Central Asia and the Southern and

Eastern Mediterranean – SEMED region.

• Owned by 68 countries and 2

inter-governmental institutions (EU, EIB).

• Capital base of €30 billion

• Highest credit rating (AAA/Aaa) from all three

main rating agencies (S&P, Moody’s and Fitch)

• In 2018, India and San Marino became our

shareholder

EU 28

Countries (1)

63%EBRD region

excluding

EU

7%

Others

11%

USA

10%

Japan

9%

Shareholding structure

(1) Includes European Community and European Investment Bank (EIB)

each at 3%. Among other EU countries: France, Germany, Italy, and

the UK each holds 8.6%

EBRD’s activities Financing Instruments Topics of interests Contact

What is the EBRD?

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AAA/Aaa rated multilateral

development bank

Since 1991, EBRD invested over €125

billion in around 5,300 projects across

private and public sectors in its countries of

operations, including:

In 2018:

• €9.5 billion invested in 395 projects

• Private sector accounted for 73% share

8.18.7 9.2 8.7

1.30.7

0.40.8

0

20

40

60

80

100

120

140

0

1

2

3

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5

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2015 2016 2017 2018

Ne

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stm

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bu

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stm

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BI)

Equity ABI

Debt ABI (and guarantees)

Net Cumulative Bank Investment


Benefits of working with us

EBRD’s Value-Added: a unique offering

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Strong, internationally recognised partner with long term perspective

Long established policy dialogue with Government and Regulators

Unparalleled presence in the region provides mitigation of political and

regulatory risks

Preferred creditor status in all countries of operations

Flexible deal structure and product matching services

Catalyst to access additional finance

Dedicated team with expertise in a variety of sectors and countries

Donor-funded technical assistance available for economically viable

sustainable development projects


EBRD in Romania

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• Country of operation

since 1991

• €8.3 billion invested in

Romania in over 429

projects

• 76% of the EBRD’s

cumulative investments

in the private sector

• 24% of the EBRD’s

current portfolio in

Romania in equity

• €1.9 billion current

portfolio of projects,

comprised of 164 active

operations as of February

2019

318

721

593

449

612

508

592

260

201

547

440

0

200

400

600

800

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annual Bank Investments (€ m)


• Common and preferred stock. Minority stake, typically in the range of 20-30%

• Support to strategic investors. Sharing of development-stage risk.

• Long term partnership. Long exit horizons (5-10 years).

• IPO participation as an anchor investor. Increased credibility and comfort to investors and financiers.

• Board representation. Positioning as a neutral party (“honest broker”) providing commercial/technical advice and promoting best Corporate Governance practices.

• Flexible loan structure. Senior/subordinated, mezzanine, project finance, convertible debt, reserve-based or subscription of bond issues.

• Long tenors. Up to 10 years, tailored to needs.

• A/B syndication structures. Preferred creditor status. Mobilisation of commercial credit under the Bank’s umbrella.

• Co-financing/Parallel lending with local/international banks

• Multi-currency lending. EUR, USD or local currency.

Debt Equity

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Public equity

(IPOs/ FOs)

Strategic investor

Equity

financing

Private/ state

owned investor

Financial

investor

Public debt

Convertible

Debt / Equity

Acquisition

finance

Project

finance

Senior corporate

facilities Corporate bonds

Private debt

Debt

financing

Alternative

financing

Products

Financing InstrumentsEBRD product flexibility – Tailored to the client’s needs

Loan with

warrants


Direct Equity Investment criteria


Notes/Exceptions

Preferred ticket size: €10 – 100m differs on geography

Sectors: Most sectors except defense, tobacco, spirits,

gambling, banned substances

Stake: 5 - 35% minority stakes can take <5% in sizeable IPOs

Deal type: Growth capital, Mezzanine can do Buyouts in partnership with a

Pre-IPO, IPO PE house, limited cash-outs, no

turnarounds

Investment cycle: Not bound by fund raising Exit route in 3 – 7 years required but

cycles or investment periods can hold longer if beneficial

Return expectations: Differentiated per sector, Sound banking practices critical

geography and risk profile,

prepared to cap upside in call/

put arrangements


Equity investments at EBRD


Since 1992

• 890 equity investments made

• €16.4 billion* Equity Capital

invested

• €23.4 billion Combined

Cumulative Fair Value

and Proceeds on Equity

Investment

• 10.1% IRR on all Equity

• ~200 companies in our

portfolio

*Excludes undrawn commitments Note: as at 31 December 2017


Private Equity and SMEs

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➢ There needs to be both supply and demand for private equity; my predominant view is

that demand will attract supply.

➢ SMEs that have access to credit are the target group, but they have less short term

incentive to attract PE.

➢ The key is to find “Gazelle shareholders” that value Private Equity, understand their

opportunity, are strategic, and are willing to prepare. It is a long conversation, let

alone coming to agreement on valuation, especially in light of asymmetric information!

➢ EBRD Advisory for Small Business can help.

➢ EBRD Blue Ribbon clients are an opportunity for EBRD and can demonstrate the

benefits of PE and robust capital structures more generally.

➢ EBRD Equity Funds Team can, has and will invest in SME Funds, but on a limited basis.

➢ Beyond all other considerations, EBRD evaluates the General Partner Team for (a)

experience, (b) skill coverage, and (c) evidence of a high level of cohesiveness.


Advisory support for SMEs

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Our mandate: Help SMEs grow and become more competitive by facilitating their access to

know-how and expertise

What we offer: Tailored business advice (business, marketing, corporate governance, financial

management, etc.), delivered by local and international experts

➢ Local advisory projects (EBRD grant to cover 70% of the assignment cost - average project cost

€13,000)

➢ International advisory projects (EBRD grant to cover between 88% and 78% of project cost - average

project cost is €40,000)

➢ FMEP - Financial Management Enhancement Project (EBRD grant to cover 75% of the assignment cost)

➢ IPO GO! SME Pre-Listing Support – for SMEs with high potential for a successful listing or bond issuance

(compliance with listing requirements, investor relations and other aspects of capital market finance;

active in Slovenia and Greece – to be replicated in Romania soon)


Advisory for SMEs

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1993 → 2019

+ 900 SMEs received support

local or international

advisory projects

> €9 M grant financing thanks

to the support of our donors

Eligibility criteria available at

www.knowhowromania.ro

➢ Agroserv Mariuta

Changing the business model

➢ Autonom

Facilitating access to additional

sources of finance and to new

markets in Europe;

Client “Blue Ribbon”

➢ DepacoWetterbest brand building

Strategic planning


Selected recent activity in Romania


Romania

EUR 25,000,000

Equity participation

alongside Mid Europa

Partners

2017

Romania

RON 32,000,000

Equity investment

2017

Romania

19% equity participation

alongside JC Flowers

2018

Romania

Equity investment along

Carlyle International Energy

Partners

2017

Romania

EUR 5,000,000

Senior loan for car fleet

expansion

2018

Regional

EUR 16,000,000

Senior loan for capacity

expansion

2019

Romania

EUR 75,000,000

Participation at the IPO of

the company

2014

Romania

EUR 50,000,000

Participation at the IPO of

the company

2013


http://agricover.ro/

Contact

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Mark Davis

Regional Head of Romania & Bulgaria

E-mail: [email protected]

Tel: (+4021) 202 7171


ceo conference 2019 · sme pre-listing support –for smes with high potential for a successful...

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