LONDON, ENGLAND — The European Bank for Reconstruction and Development (EBRD) said on Jan. 15 that it increased its investments in 2014, meeting rising demand from emerging economies grappling with protracted weakness and the impact of geopolitical tensions.
The rise in EBRD financing to €8.9 billion from €8.5 billion in 2013 came despite a sharp fall in its investments in Russia following guidance from shareholders in July that they would, for the time being, consider no new projects in the country.
As a result the bank was able to invest more strongly in other countries that it serves. Demand is expected to remain high in 2015 with investments roughly in line with 2014 levels.
Financing for Russia accounted for just 7% of the total last year, with investments falling to slightly over €600 million from €1.8 billion in 2013.
Turkey, where the EBRD has been active for only five years, became the largest individual recipient of EBRD financing. Investments rose to €1.4 billion from €920 million in the previous year. The bank opened a third office in the country, in the south-eastern city of Gaziantep in response to demand for EBRD funding outside large metropolitan areas.
Investments also rose in countries in the Balkans, the Caucasus and in Eastern Europe, where the EBRD re-engaged energetically with Ukraine after the new administration embarked on a program of economic reform. Kiev also signed up to an Anti-Corruption Initiative, a major step forward in its bid to improve the investment climate.
New lending — as well as renewed commitments — to Ukraine exceeded €1.2 billion, including support for road transport as the EBRD resumed lending to the public sector. The bank has become involved in lending to upgrade Ukraine’s gas transmission system. A second Ukrainian office was opened in Lviv, aimed primarily at delivering services to the country’s smaller firms.
The EBRD invested in several grain related projects in the Ukraine in 2014, including:
• A $25 million loan and $130 million syndicated facility to Nibulon, Ukraine’s leading grain producer, logistics operator and exporter. The loan will allow Nibulon to source sufficient financing to support its operations.
• A loan of up to $60 million to Brooklyn-Kiev LLC, for development of a grain trans-shipment terminal in the Port of Odessa with an anticipated annual throughput capacity of up to 4.5 million tonnes of grain.
• Taking part in a $230 million syndicated loan facility for Kernel Group of Ukraine, one of the largest vertically- integrated agricultural holdings in the country. Kernel is involved in grain handling, oilseed crushing and trans-shipment activity across Ukraine and Russia, and in farming operations in Ukraine.
Another major grain related investment for the EBRD this year included a four-year, $4 million loan to Elnur Dan LLC for construction of a flour mill in Jalalabad, Kyrgyzstan. Elnur Dan is a private firm established in 2004 and is the country’s third largest flour producer.
Elnur Dan’s existing mill on the outskirts of the capital, Bishkek, produces 38,000 tonnes of flour annually and 4,000 tonnes of pasta. The new mill’s equipment is being imported from Turkey and will be built in the country’s most densely populated region, Jalalabad, where 1.1 million people live.
The EBRD’s investments increased in 2014 as emerging economies continued to suffer due to events surrounding Russia and Ukraine, a stubborn lack of recovery in the Eurozone and the global market turbulence that erupted towards the end of the year.
These developments will have weighed on the EBRD’s 2014 net earnings, the bank said, reflecting particularly the impact of the severe economic downturn on the Bank’s operating assets in Ukraine and the effect of the steep fall in the ruble on its Russian equity holdings.
In regard to economic resilience, the bank concluded agreements with authorities on measures to improve the investment climate and governance standards in Albania, Moldova and Serbia, in addition to launching the Anti-Corruption Initiative in Ukraine.