26253 - A1 Belarus

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Summary of Proposed Investment

Project Number

26253

Company Name

TIGULLIO HOLDINGS LIMITED

Date SPI Disclosed

Oct 12, 2007

Country

Belarus

Industry

Tourism, Retail and Property

Projected Board Date

Nov 12, 2007

Status

Completed

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Jun 24, 2008
Signed : Jul 1, 2008
Invested : Feb 13, 2009

Project Description

The A1 Group (the A1 Group or the sponsor) plans to open 128 discount stores in the six largest cities of Belarus, which the sponsor plans to complete by 2010. Discount stores are characterized by low numbers of Stock Keeping Units (SKUs), limited in-store service, and, as a result, low prices. The first stores will open in Minsk, and will be followed by stores in other Belarusian cities. The sponsor has an expected ratio of owned to rented stores of 40:60. These stores, located in residential areas, will have an average trading area of 500 m2 and will serve low- to mid-level income customers.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	16.0
Equity

Development Impact

Retail infrastructure in Belarus is poor and in need of improvement. The project is expected to help address the strong household demand for modern retailing in Belarus, mainly driven by gains in consumer income as a result of rapid economic growth. The opening up of 128 modern discount stores in Belarus as a result of this project will open up new retail options for consumers and facilitate the transfer of modern warehousing and retail techniques to a country where the modern format retail industry is still in the early stages of development. The establishment of this retail chain across the country will be instrumental in improving the quality and quantity of retail operations in Belarus. The project will also support a South-South investment, thereby encouraging other companies to pursue investment opportunities in Belarus as the country’s perceived risk continues to diminish.

IFC will support A1 in its efforts to establish retail operations in Belarus. IFC''s expected development contribution will be as follows:

- Long term financing:

Long term funding alternatives are scarce in Belarus. IFC will provide long term flexible financing which the company would not able to raise from commercial banks in Belarus. IFC''s C loan structure, which is not available in the Belarus market, provides long term funding in a form that meets the company''s needs.

- IFC’s Retail Expertise:

A1 views that IFC’s sector expertise, regional knowledge and its experience in other retails projects in the region brings value to the proposed investment. IFC is providing its global industry expertise and technical knowledge to help the company sharpen its retail expansion strategy in Belarus. Once the company has reached a critical mass of stores, IFC will look into the possibility of assisting the company improve its local supply chains with local small and medium manufacturers and farmers.

- E&S Standards:

IFC will assist the company to maintain higher environmental, fire & life safety and social standards.

- Political Risk Mitigation:

The domestic political situation, as well as the country''s heavy economic dependence on its neighbors, in particular Russia, has led A1 to request the support of IFC in developing its investment in Belarus.

The key environmental and social aspects of the project, which have been considered are the following:

- Environmental assessment and site planning processes;
- Social and Environmental management systems and structure;
- Labor and working conditions;
- Resource efficiency;
- Refrigerant selection;
- Emissions to water;
- Solid waste disposal and management;
- Life and fire safety;
- Food hygiene;
- Site acquisition.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because the project has limited potential adverse environmental and social impacts that are few in number, site specific and readily mitigated.

Contacts

For Inquiries About the Project, Contact

Mr. Denis Gorbuzov, CEO
IOOO BelMarket
Logoysky Trakt 50
Akvabel Hotel
4th Floor
Minsk, Belarus

Telephone: +375 17 237 9425
Fax: +375 17 237 9433
E-mail: a1x5@tut.by

The environmental documents will be made available at the following location:

Business center "Akvabel",
Minsk region,
Cross of Logoiskii trakt and MKAD,
office 302

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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