The project sponsor is DI Belarus Brewing Ltd., a private company incorporated in Cyprus. The sponsor is 100% owned by Detroit Investments Ltd., which is controlled by Eugene Kashper (26%), Edenbury Holdings Limited (51%) and members of the management team (24%) (collectively referred to as the “Individuals”). Edenbury Holdings Limited is controlled by Arkady Livshits. The Individuals have been in the beer business since 1992 and were successful in turning around three Russian breweries, launching and promoting national brands, and establishing a nationwide distribution network in Russia. The Individuals’ Russian brewery arm, Pivovarni Ivan Taranova (PIT) is a fast-growing beer company which captured 5% of the Russian beer market within the first four years of operations. DBBC will be owned by DI Belarus (77%), IFC (20%), and Lebortovo Investments Ltd. (3%) (“Lebortovo”). Lebortovo is a Cyprus-based company wholly owned by Sergei Levin, a Belorussian national and the CEO of DBBC.

Total project cost is estimated at $31.3 million. The proposed IFC investment is an A Loan for IFC’s own account of up to $7 million and an equity investment of up to $3 million.

10.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	7.0
Equity	3.0

* These investment figures are indicative

Dednovo is located in on a large site in Bobruisk, Mohilev Region, 100 Km from Minsk in Central Belarus. The production facility was built in the mid 1970s and is in need of refurbishment. Water is supplied from three wells and is of adequate quality. Electricity is supplied from the grid and gas for its boilers is supplied by the local gas company via pipeline. The site is accessible by rail and roads. With the necessary refurbishments, the brewery has the potential to brew significant quantities of high quality beer.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
Location of environmental documents in locally affected community

The project will be the first brewery privatization involving a western investor and among the few privatizations completed in Belarus. IFC’s participation provides political risk cover and comfort to the sponsor. IFC’s involvement as an honest broker will also provide comfort to the government that the transaction is fair to all parties. The successful and visible privatization of Dednovo will have significant demonstration impacts beyond the immediate sector. The project is likely to be a catalyst for further FDI in Belarus where such investments have lagged. In addition to providing long-term financing on terms presently unavailable in Belarus, IFC’s presence would be instrumental in attracting additional financing from a co-financier or equipment supplier to complete the Financing Plan. The project will generate significant benefits to the Belarus economy and create a strong base for economic growth in the beverage industry in Belarus. It will fully rehabilitate the existing productive assets and upgrade and modernize the equipment to international standards. The project will support more than 300 employees, most of whom were laid off when the plant ceased regular operations in 2002. Additional jobs will also be created as the company develops its transport and distribution network. Through procurement of local goods and services, the project will also establish strong linkages to suppliers and other SMEs.