The Project company ZAO Kulon-Yugros was established in Russia in 2005. The shareholder structure of ZAO Kulon-Yugros includes: - Aldama (Overseas) Ltd. (owns 45% stake in ZAO Kulon-Yugros), a Cyprus company privately held by Russian and Portuguese individuals who are experienced commercial real estate developers and operators; - Meridian B OOO (owns 50% stake in ZAO Kulon-Yugros), a Russian company privately owned by Russian individuals involved in construction business; - WeMaTec Werbematerialien und Wertechnik Vertriebs GmbH (owns 5% stake in ZAO Kulon-Yugros), a German company.

Total project cost is estimated at EUR30.5 million. The proposed IFC investment includes a EUR4.8 million A loan and a EUR5.1 million C loan for IFC’s own account.

14.44 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	14.44
Equity

* These investment figures are indicative

The Project site is a 8.95 hectare land plot located in the industrial area near the city of Mineralnye Vody in Stavropol region of Russian Federation. The site is located within 5 km from the M-29 Caucasus highway. There are road and rail connections to the site.

The Project addresses the issue of undersupply of quality logistics warehousing facilities in Mineralnye Vody region. The Project would have a strong demonstration effect as the first international standard warehouse in the region. It would improve competitiveness and efficiency of the manufacturers and distributors using the facility. New jobs will be created by ZAO Kulon-Yugros and its tenants. The final consumers would benefit from a potential increased choice and cost savings arising from improved operating efficiencies and availability of high quality warehousing space for the storage and distribution of goods. The government would benefit through taxes paid by the Project and infrastructure improvement facilitating logistics and trade and thus attracting new business in the region.

IFC’s role and additionality in the Project includes: provision of financing adequate for the needs of the client, otherwise unavailable in the current market environment, including a project finance structure and a long tenor of the investment; assistance to the Project in enhancing its environmental and social standards; and mobilization of parallel debt for the Project.

This is a Category B project according to IFC’s Policy and Performance Standards on Social and Environmental Sustainability. The Project’s construction and operation practices are not associated with significant adverse impacts on environment or health and safety of local communities. The key environmental, health and safety issues, which will be addressed as part of the project implementation, are: (i) management capacity of the sponsor and the company to oversee environmental and social performance of third parties; and (ii) mitigation of adverse impacts on a protected area Caucasian Mineralnye Vody, where the project is located.

ZAO Kulon-Yugros has presented a plan to address these issues and ensure that the Project would comply with the environmental and social requirements, Russian laws and regulations and IFC’s Performance Standards. Detailed information about the potential impacts and ZAO Kulon-Yugros’s action plan is summarized in the Environmental and Social Review Summary (ESRS) and Environmental and Social Action Plan (ESAP).