by Kenny Kline - Eastern Europe and Central Asia -

MICROCAPITAL STORY: EFSE Invests USD 10 million Into PJSC MEGABANK of Ukraine

The European Fund for Southeast Europe (EFSE) and PJSC MEGABANK, a Ukrainian commercial bank, signed a loan agreement of USD 10 million.  This long-term subordinated loan is intended to allow PJSC to enlarge its capacity to provide access to finance for micro and small enterprises.  This is EFSE’s first investment in the Ukrainian market.[3]

PJSC MEGABANK has implemented five other similar long-term lending programs with:

  • European bank for reconstruction and development (EBRD): 2 programs of support of micro-, small and medium for businesses for USD 20 million and USD 15 million respectively
  • KfW:  the program of support of small and medium businesses for USD 10 million
  • International Finance Corporation (IFC):  the program of support of small and medium businesses for USD 10 million
  • OJSC:  second project of export development in Ukraine for USD 10 million
  • German-Ukrainian Fund (GUF):  the program of support of micro-, small and medium businesses for EUR 5 million (USD 7.4 million) [2]

PJSC MEGABANK offers financial services to corporate and private clients.  The regional network has 191 branches in 25 regions of Ukraine.  The bank provides services to 336 thousand clients, including 85 thousand pensioners and social aid recipients.  The bank has assets of UAH 2,966 million (USD 360 million), a loan and investment portfolio of UAH 2,420 million (USD 294 million) and capital of UAH 539 million (USD 65 million) [2]

EFSE has an investment portfolio of EUR 562 million (USD 833 million) The group aims to foster economic development in Southeast Europe by offering long-term funding instruments to local financial institutions for lending to micro and small enterprises as well as low-income private households.  EFSE operates in Ukraine, Moldova, Bulgaria, Romania, Albania, FYR Macedonia, Bosnia and Herzegovina, Kosovo, Motenegro and Serbia.  EFSE has committed over EUR 600 million (USD 890 million) to 57 commercial banks, microfinance institutions and non-bank institutions. [1]

EFSE has a broad shareholder and investor base of donors, including:  European Commission, German Federal Ministry for Economic Cooperation and Development (BMZ), the governments of Austria, Switzerland, and Denmark, KfW, International Finance Corporation (IFC), European Bank for Reconstruction and Development (EBRD), FMO (Netherlands Development Finance Company), European Investment Bank (EIB), Oesterreichische Entwicklungsbank (OeEb), Sal. Oppenheim, Credit Cooperatif and Deutsche Bank, and the Government of Albania.  EFSE is a privately managed fund with Oppenheim Asset Management Services acting as Fund Manager. [3]

EFSE offers various financial instruments to respond to different long-term funding needs of parting lender institutions, including:

  • Medium to long-term loans
  • Subordinated loans
  • Term deposits
  • Subscriptions to bond issues
  • Certificates of deposits
  • Co-investments (syndicated loans)
  • Standby letters of credit
  • Guarantees
  • Equity and quasi-equity participation
  • Investments in securitization vehicles

EFSE also offers non-financial services through the EFSE Development Facility, including technical assistance, consulting, and training. [1]

By Kenny Kline, Research Associate

Additional Resources:

[1] European Fund for Southeast Europe

http://www.efse.lu

[2] PJSC MEGABANK

http://megabank.net

[3] EFSE Press Release

http;//www.efse.lu/news-events/press-releases/archive/press-releases-2009-10-08.html

[4] Bloomberg Currency Conversion

http://www.bloomberg.com/invest//calculators/currency.html

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