48368 - Zagreb Bond 2023

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Summary of Investment Information

Project Number

48368

Company Name

ZAGREBACKI HOLDING D.O.O.

Date SPI Disclosed

Jul 11, 2023

Country

Croatia

Region

Europe

Projected Board Date

Jun 30, 2023

Environmental Category

B - Limited

Status

Active

Last Updated Date

Jul 19, 2023

Department

Regional Industry - INF ECA

Industry

other

Previous Events

Approved : Jun 30, 2023
Signed : Jul 4, 2023
Invested : Jul 11, 2023

Sector

other

Project Description

On 6 July 2023, IFC submitted an offer to subscribe for EUR 72.5 million, equivalent to US$ 78.7 million, as an anchor investor, into a EUR 305 million, 5-year sustainability-linked bond (SLB), issued by Zagrebacki Holding d.o.o. (“ZGH”, or the “Issuer”). The issuer has accepted the offer and has allocated the bonds to IFC. The bond issue date is 11 July 2023. The Issuer is a municipal utility holding company, 100% owned by the City of Zagreb, whose subsidiaries provide essential municipal services such as waste disposal and treatment, water supply, and gas distribution. The Bond proceeds will be used to refinance an existing 7-year bond with a bullet maturity date of 15 July 2023.

Associated Advisory Engagement

IFC expects to commence an advisory project in the near term (after subscription of the bond) focused on development and implementation of climate friendly investment projects in waste management and renewable energy. IFC is considering assisting the client with technical feasibility and E&S capacity building.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	96.08
Equity

Development Impact

The main Project-level outcome is the improvement in municipal waste management in the city of Zagreb. At the market level, IFC investment in the issuance of the first Sustainability-Linked-Bond (SLB) by a municipal utility in Croatia will contribute to deepen the domestic capital market, encourage additional placement of sustainable finance instruments, and increase integration of infrastructure to capital markets in the Western Balkans through demonstration effects.

IFC has both financial and non-financial additionality associated with the proposed investment. IFC financial additionality is driven by an innovative financing structure and resource mobilization that would allow a municipal utility access to sustainable finance instruments for the first time. IFC will play the role of an anchor investor and leverage its global experience in sustainable finance instruments to mobilize local commercial and institutional investors, ensuring a successful placement of the first SLB in Croatia’s domestic capital market by a municipal company like ZGH. The SLB issuance would contribute to diversify ZGH funding sources and provide the necessary financial flexibility to implement its Sustainability Strategy focused on critical municipal investments. IFC’s non-financial additionality derives from its role in ensuring prudent debt management and the establishment of a strategic partnership with the city of Zagreb and ZGH that will pave the way for future investments to address municipal challenges.

E&S Category Rationale / Risks and Mitigation

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability. Based on the information reviewed by IFC, the proposed project is expected to have limited adverse E&S risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures, as described in the following sections.

Key E&S aspects associated with the project are: (i) adequacy of ZGH’s E&S management systems and its ability to assess and manage E&S risks and impacts across its subsidiaries and business lines per IFC PSs; (ii) labor and working conditions and emergency planning; (iii) pollution prevention, including solid and hazardous wastes and air emissions/odors; (iv) water and energy efficiency; (v) community health and safety including infrastructure safety, road safety, and life and fire safety (L&FS); (vi) land acquisition, where applicable; (vii) stakeholder engagement and community grievance mechanism.

Contacts

For Inquiries About the Project, Contact

Zagrebacki Holding
Head of Project Management Sector
Public Relations
+385 1 6420 000
info@zgh.hr
Ul. grada Vukovara 41, Zagreb
https://www.zgh.hr/

For Inquiries and Comments About IFC, Contact

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IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

The Issuer’s registered office is at Ulica grada Vukovara 41, 10000 Zagreb, Croatia.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose 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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