26654 - BAC Russia

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Summary of Proposed Investment

Project Number

26654

Company Name

Asteros AO

Date SPI Disclosed

Jul 23, 2008

Country

Russian Federation

Industry

Telecommunications and Technology

Projected Board Date

Aug 22, 2008

Status

Active

Sector

Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)

Department

Regional Industry INF LAC & EUR

Environmental Category

C - No Impact

Previous Events

Approved : Jun 17, 2009
Signed : Aug 17, 2009
Invested : Nov 19, 2009

Project Description

The project involves a $22 million investment in B.A.C (BAC or the company) for expansion of its operations to regional cities in Russia and potentially elsewhere in the Commonwealth of Independent States region, the establishment of a number of new data centers, and incremental working capital. Through the investment, the company will provide an increased array of IT services required by medium-sized and large clients, both in the private and public sectors.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity	13.10

Development Impact

Some of the development impacts are highlighted below:

Data Center Provision:
High quality hosting is a key element of IT infrastructure enabling the increased use of high technology among private corporations, individuals and government. Through economies of scale, specialty knowledge and extensive staff training, BAC will allow their clients to enjoy cost savings and high quality service provisioning that they would not otherwise obtain if these services were operated in-house.

Increase in Capacity:
The Russian IT sector is currently under-served by data center capacity. Further development is required to build capacity and encourage more sophisticated use of technology for both domestic corporations as well as small businesses.

SME development:
BAC’s regional expansion plans will provide the company with opportunities to work with SMEs in frontier Russian and CIS regions. For the SME sector, data centers allows for young businesses to have access to professional grade technology platforms and reliable, consistent Internet connectivity without the burden of significant upfront capital expenditure on equipment and the ongoing high costs of recruiting specialist IT staff.

Regional Expansion:
BAC plans to open new offices and acquire mid-size IT companies in frontier regions that have inadequate IT services capacity. The company’s move to these regions would support existing clients that are expanding business to those regions, in turn, increasing economic activity.

Employment and skills training:
Over the next four years, BAC plans would create several hundred new engineering jobs. Given the shortage of qualified engineers in Russia, most of the new hires are expected to be lower-skilled employees that would be trained. BAC’s training programs and coupled with tailored mentoring are expected to turn those low-skill entrants into high-skill employees with the appropriate level of expertise for the company’s offerings.

IFC will play an important role in supporting a domestic, entrepreneur-led company in expanding its operations while enhancing its corporate governance. IFC will also encourage the company with Best Practice Environmental Policies. IT systems require significant power to operate. Hosting systems within dedicated data centers, as opposed to having corporations and governments host their own systems in-house, should reduce overall energy consumption due to both economies of scale and the use of specialized design. Data centers are more able to utilize new technologies designed to reduce environment impact such as combined heat and power (CHP) systems, power-managed servers and adaptive cooling. IFC would provide knowledge and work closely with BAC in the adoption of best practice environment policies with respect to data center design, equipment procurement, operations and staff training.

At early review, it is expected that BAC facilities would be leased and custom-fit rather than purpose-built for BAC. During appraisal, environmental and social risks and impacts of any fuel tanks, cable connections, and security issues will be reviewed. As a result of this early review, the project has been provisionally classified as a Category C project according to IFC''s Environmental and Social Review Procedure.

Contacts

For Inquiries About the Project, Contact

Neil Vereschagin, CFO,
BAC
23, Novohohlovskaya Street,
Moscow 109052

Telephone: 7-495-787-2450
Fax: 7-495-787-2489
E-mail: Nil.Vereschagin@bacint.ru

For Inquiries and Comments About IFC, Contact

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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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