33235 - DARP APS

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Summary of Investment Information

Project Number

33235

Company Name

APS FUND BETA uzavreny investicni fond, a.s.

Date SPI Disclosed

May 13, 2013

Country

Eastern Europe Subregion

Region

Europe

Projected Board Date

Jun 13, 2013

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 30, 2016

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Sep 3, 2013
Signed : Apr 24, 2014
Invested : Aug 14, 2014

Sector

Commercial Banking - Distressed Assets

Project Description

The proposed project is part of IFC’s program to promote the development of distressed asset markets. In this project IFC is partnering with APS Holding, Czech Republic to acquire non-performing loan portfolios in Romania, Bulgaria, Montenegro and potentially other countries.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	26.48
Equity	0.66

Development Impact

- Economic Development: The successful implementation of the project will improve the secondary market for distressed assets and could catalyse investment interest on the part of other investors.
- Business Environment: As financial intermediaries increase the sale of their NPLs to independent private investors, bank balance sheet transparency increases. Assets priced at market serve as a reference for true asset values on balance sheets as well as in the system.
- Financial Infrastructure: IFC''s involvement in this Project would positively impact the market place by building capacity of the financial markets in ECA and, in particular, the Balkans. The Project is expected to increase the ability of financial intermediaries to offload their assets.

- Market Support: The vast number of opportunities for DA investments in the United States and Western Europe is significantly crowding out other regions, including ECA. Through this project, IFC supports the evolution of local DA markets by financing a regional player.
- Knowledge Transfer: The transaction will transfer best practices for DA collection and resolution, corporate governance and environmental and social management, important in ECA markets, many of which are experiencing their first financial crisis.
- Liquidity: The Project will provide liquidity for DA investments, important as liquidity is extremely scarce for such investments.

E&S Category Rationale / Risks and Mitigation

This project is a loan to co-finance acquisition of distressed asset portfolios jointly with APS. Portfolios will be purchased primarily from banks using a structure to be developed, and includes an equity stake in APS Holding, owner of the servicers in Romania, Bulgaria, Serbia and Montenegro.

Based on the APS''s past experience, the SPV''s investments will include pools of retail, SME, corporate, and leasing NPLs; acquisition of failed entities (consumer finance companies, leasing companies, factoring companies, etc); and single credit situations. While the proportion of each type of investments is not known, the portfolio risks are considered to be low and medium and the project has been classified as a Category FI-2 Project according to IFC’s Environmental and Social Review Procedure. The project will be required to screen the portfolios against the IFC FI Exclusion List and any unresolved social and environmental issues or high risk projects and work with debtors to achieve the compliance with applicable national E&S laws and regulations and where necessary the IFC Performance Standards, when the resolution strategies allow the interactions with the debtors.

The SPV''s investment may include low and medium E&S risk investments such as pools of real estate, leasing, SME and corporate projects. The main E&S risks and impacts of the project are expected to be from acquiring some operating debtors'' activities in Bulgaria (mainly in trade and supplier of medical equipment, meat processing, and import/export of used cars), and some leasing projects. The number of such transactions is expected to be quite few. The company does not currently have a formal Environmental and Social Management System (ESMS). The company and sub-servicers need to be in compliance with the IFC Performance Standard 2: Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Martin Machon
Celetná 988/38
110 00 Prague 1
Czech Republic
mailto:holding@aps-holding.com
phone +420 225 375 500
fax +420 225 375 515

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Local Access of Project Documentation

N/A

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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