42710 - OTP Leasing II

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Summary of Investment Information

Project Number

42710

Company Name

OTP LEASING LLC

Date SPI Disclosed

Aug 2, 2019

Country

Ukraine

Region

Europe

Projected Board Date

Sep 5, 2019

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Sep 12, 2025

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Oct 23, 2019
Signed : Oct 28, 2019
Invested : Nov 5, 2019

Sector

Leasing Services

Project Description

A senior loan of up to US$40 million equivalent, available in US$ or in EUR to OTP Leasing Ukraine LLC (the “Company” or “OTPL”), a fully owned subsidiary of OTP Bank Hungary (“OTP Group”). The loan includes up to US$20 million from IFC’s own account and up to US$20 million from the Clean Technology Fund (“IFC-CTF”) as part of the Climate Investment Funds, or from another eligible blended climate finance program implemented by IFC. The use of proceeds of the proposed loan will be 100% for eligible energy efficiency and renewable energy (EE & RE) projects in Ukraine. Proposed tenor is up to 5 years with a 2-year grace period.

The investment would help build EE & RE portfolio of OTPL, the largest leasing company in Ukraine with a market share of 40% and a notable SME outreach. The proposed project would be IFC’s first with OTPL, and the second engagement with OTP Group in Ukraine - OTP Bank Ukraine is an existing IFC client under Global Trade Finance Program.

Potential participation of a B-lender with up to US$10 million loan will be considered. This will increase the total facility amount to up to US$50 million.

Associated Advisory Engagement

IFC has an ongoing advisory project – Ukraine Green Finance Program, launched in December 2018 as four years umbrella program for Ukraine, aimed to develop new areas of green finance to help facilitate investment in EE & RE in the country. OTPL will potentially be one of the program clients for capacity building and raising awareness.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity

Development Impact

The most significant, expected project-level outcomes are: increased access to sustainable energy / green leasing through the climate-dedicated leasing line in Ukraine for high-efficiency machinery, equipment, logistics, and distributed generation renewable energy equipment, resulting in GHG emission reduction along with potential MWh saved and MW RE capacity installed; and increased access to financing for underbanked SMEs with a particular focus on the agri sector. Beyond the Project, IFC anticipates that the Project has the potential to promote greater sustainability through capacity building and demonstration channels, and market competitiveness through demonstration and replication channels.

E&S Category Rationale / Risks and Mitigation

OTPL provides long-term financial and operational leasing to large, medium and small businesses in Ukraine. The current business is focused on passenger vehicles, agricultural equipment, and commercial vehicles. The use of proceeds of the proposed loan would be 100% for financial lease of eligible energy efficiency and renewable energy projects. The projects will be focused on energy efficient vehicles and agri-sector, and no large-scale RE generating facilities are planned to be financed. The Company is not exposed to any coal related projects. The expected portfolio will likely comprise low to medium E&S risk investments with potentially limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. The project has therefore been categorized as FI-2 according to the IFC’s Sustainability Policy. For this project, IFC's applicable requirements will be to ensure that all eligible projects are screened against the IFC Exclusion List and the applicable environmental and social national laws and regulations, as well as comply with the IFC Performance Standards in case if large corporate or potentially risky assets are financed. Coal related projects, hydro power plants with capacity above 15MW, and any assets exposed to any unresolved reputational or E&S risks such as (a) involuntary resettlement, (b) risk of adverse impacts on Indigenous Peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks will not be eligible for financing from this project.

The main E&S risks and impacts of this investment relate to the company having adequate systems and capacity in place to manage the operations being financed in accordance with applicable requirements, including compliance with the IFC's Exclusion List, Host Country Laws and Regulations, and Performance Standards. OTPL has assigned an ESMS Officer and operates the Environmental and Social Management System (ESMS), which covers SME leases. For this project, the company will be required to revise and enhance the ESMS in line with the IFC’s applicable requirements and ensure it covers all leases eligible for financing under this project, develop the external communication mechanism, and continue to comply with the requirements of IFC's PS2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

OTP Leasing Ukraine LLC
Andrey Pavlushyn
CEO
+380 (44) 500 1000
Andrey.Pavlushyn@otpleasing.com.ua
43 Zhylianska St., 01033 Kyiv, Ukraine
www.otpleasing.com.ua

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Task Title & Description	Anticipated Completion Date
Revise ESMS in line with IFC's requirements	08/31/2019
Submit E&S training plan	08/31/2019
Carry out training for staff to implement the revised ESMS	11/29/2019
Develop external communication mechanism	11/29/2019
Submit ESMS implementation records	02/27/2020

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