ceo conference 2019 · sme pre-listing support –for smes with high potential for a successful...
TRANSCRIPT
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
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2015 2016 2017 2018
Ne
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mu
lativ
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k in
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stm
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tAn
nu
al
bu
sin
es
s in
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stm
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t (A
BI)
Equity ABI
Debt ABI (and guarantees)
Net Cumulative Bank Investment
EBRD’s activities Financing Instruments Topics of interests Contact
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’s activities Financing Instruments Topics of interests Contact
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)
EBRD’s activities Financing Instruments Topics of interests Contact
• 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
EBRD’s activities Financing Instruments Topics of interests Contact
Direct Equity Investment criteria
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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
EBRD’s activities Financing Instruments Topics of interests Contact
Equity investments at EBRD
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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
EBRD’s activities Financing Instruments Topics of interests Contact
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.
EBRD’s activities Financing Instruments Topics of interests Contact
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)
EBRD’s activities Financing Instruments Topics of interests Contact
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
EBRD’s activities Financing Instruments Topics of interests Contact
Selected recent activity in Romania
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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
EBRD’s activities Financing Instruments Topics of interests Contact
Contact
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Mark Davis
Regional Head of Romania & Bulgaria
E-mail: [email protected]
Tel: (+4021) 202 7171
EBRD’s activities Financing Instruments Topics of interests Contact