Summary of Proposed Investment
Project Number
10448
Company Name
TOO Mittal Steel SME Resource
Date SPI Disclosed
Nov 28, 2000
Country
Kazakhstan
Industry
other
Projected Board Date
Dec 29, 2000
Status
Completed
Sector
Foreign Portfolio Equity Fund - Sector
Department
Regional Industry MAS MCT
Environmental Category
FI
Previous Events
Approved : May 3, 2001
Signed : Nov 20, 2001
Invested : Nov 23, 2001
Project Description
The Resource will be managed by Ispat Karmet. The Resource will provide loan, quasi-equity, and equity financing, while the manager will provide technical and business assistance to small and medium enterprises (SMEs) located in Karaganda Oblast. Target size of investments is $20,000 to $1million.
The proposed Resource is specific in that it aims to stimulate the relationship between the large corporate sector (in this case, Ispat Karmet) and the private SME sector. Specifically, IKR will target its investments primarily at SMEs that already are or have a good potential to become suppliers to Ispat Karmet, which is the largest steel producer in Kazakhstan.
This project is the result of IFC''s effort to identify a fully commercial and economically-sustainable model for strengthening SMEs affiliated with large international organizations in general, and with Ispat Karmet in particular. The concept of this Resource is based on an existing model: the Anglo-American SME funds, whereby Anglo-American of South Africa has provided financial, technical, and managerial support to enable local SMEs to become suppliers to its mines and businesses. The Anglo-American initiatives have been successfully operating since 1989, substantially increasing supplies from local SMEs, and providing good financial returns on investment.
IFC Role and Development Impact:
IFC''s primary role in this project is to promote corporate citizenship. If successful, this project could have considerable replication possibilities as many large organizations working in developing environments, many of them IFC clients, have similar needs.
The proposed project has substantial development impact. Important impediments to the development of the Kazakh SME sector include lack of access to equity capital, limited availability of long-term lending, and business managers’ insufficient business expertise and technical training. The IKR aims to alleviate these constraints by providing financing supplemented by appropriate technical assistance.
The project is consistent with the World Bank Group strategy to support the growth of the private sector in Central Asia. In line with this strategy, IFC''s priorities for Central Asia include supporting SMEs through financial intermediaries as well as through corporate-sponsored financing.
The proposed Resource is specific in that it aims to stimulate the relationship between the large corporate sector (in this case, Ispat Karmet) and the private SME sector. Specifically, IKR will target its investments primarily at SMEs that already are or have a good potential to become suppliers to Ispat Karmet, which is the largest steel producer in Kazakhstan.
This project is the result of IFC''s effort to identify a fully commercial and economically-sustainable model for strengthening SMEs affiliated with large international organizations in general, and with Ispat Karmet in particular. The concept of this Resource is based on an existing model: the Anglo-American SME funds, whereby Anglo-American of South Africa has provided financial, technical, and managerial support to enable local SMEs to become suppliers to its mines and businesses. The Anglo-American initiatives have been successfully operating since 1989, substantially increasing supplies from local SMEs, and providing good financial returns on investment.
IFC Role and Development Impact:
IFC''s primary role in this project is to promote corporate citizenship. If successful, this project could have considerable replication possibilities as many large organizations working in developing environments, many of them IFC clients, have similar needs.
The proposed project has substantial development impact. Important impediments to the development of the Kazakh SME sector include lack of access to equity capital, limited availability of long-term lending, and business managers’ insufficient business expertise and technical training. The IKR aims to alleviate these constraints by providing financing supplemented by appropriate technical assistance.
The project is consistent with the World Bank Group strategy to support the growth of the private sector in Central Asia. In line with this strategy, IFC''s priorities for Central Asia include supporting SMEs through financial intermediaries as well as through corporate-sponsored financing.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mr. N. Chaudhary, General Director, Ispat Karmet, 1 Lenin Avenue, Temirtau, Kazakhstan