Intercity was established in 1992 by its CEO, Mr. Vural Ak. The company is presently majority owned by its Founder. A group of financial investors acquired a significant minority stake in the company in 2004. The consortium of financial investors is led by a Turkish Private Equity Fund managed by Turkven Private Equity (IFC is a cornerstone investor in this fund) and Advent International Corporation, and includes DEG (the German bilateral development agency) and FMO (the Dutch bilateral development agency). DEG and FMO have also simultaneously provided a $20 million long term financing facility to Intercity.

IFC’s proposed investment consists of: - a six year $15 million term loan for IFC’s own account. - a five-six year $25 million B Loan for the accounts of participating banks. - an equity investment of up to 10% of the company’s shareholding.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity	5.0

* These investment figures are indicative

Intercity operates out of its head office in Istanbul, Turkey. The company also has offices and service centers in Ankara and Izmir. The company is planning to open several other service centers in 2005. Under the proposed project, the company can provide lease financing to companies throughout the country.

The main objective of this project is to address the scarcity of medium term financing for the auto leasing industry in Turkey and to promote the development of operational leasing in Turkey. The lack of funding for the auto leasing industry results in overall higher cost of funds for the leasing companies, lost opportunities for financial sector development and hinders growth of the economy. By providing IFC’s stamp of approval, which is traditionally well regarded in Turkey, to an operational leasing company, this investment is expected to have a catalytic effect in encouraging other financial intermediates to consider operational leases as an alternative financing instrument. For many years, operational leasing, while allowed under Turkish leasing laws, was until recently significantly disadvantaged due to disproportionately large tax benefits for financial leasing. On July 1, 2003, however, Turkish financial standards were harmonized with IAS, and from that date, the tax advantages for financial leasing were removed. The growth and success of Intercity will contribute significantly to the overall growth of operational leasing in Turkey. This project also fits IFC ‘s strategic objectives of playing a catalytic role in attracting additional foreign capital to Turkey. IFC will be able to leverage its investment and attract additional funds to the transaction, via the proposed IFC B Loan umbrella, which will enable international banks who otherwise will be risk averse to investing in Turkey to be more inclined to invest in this project. IFC’s support of Intercity will help the company expand its leasing activities as well as further develop its internal management and technical systems. IFC’s credit line will provide needed financing to Intercity in an environment where access to long term financing is limited. At the same time, the demand for leasing far outweighs the supply provided by existing leasing companies.

This is a Category B project according to IFC’s procedure for Environmental and Social Reviews of Projects, because a limited number of specific environmental and/or social impacts may result which, can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or designed criteria.
Location of environmental documents in locally affected community
Environmental documents are located in the company’s headquarters and main service center at: Dudllu Organiza Sanayi Bolgesi 3 Cadde, G0131 Sok. No: 26 34775 Yukan Dudullu Istanbul, Turkey