The Project Company is indirectly owned by VTB Capital plc (57.5%), Fraport AG Frankfurt Airport Services Worldwide (“Fraport”, 35.5%) and Copelouzos Group (7%). Fraport is a leading international airport operator with €2.1 billion revenue in 2008 and operates Frankfurt International Airport in Germany, servicing a total of 51 million passengers in 2009. Additionally, Fraport has airport activities in 12 locations worldwide via equity participations, concession and management contracts, serving in aggregate more than 170 million passengers per year. Fraport is listed on the Frankfurt Stock Exchange, the largest shareholders are the State of Hesse (31 %), the City of Frankfurt (20%) and Lufthansa (10%). VTB Capital plc is the United Kingdom-based investment banking arm and subsidiary of VTB, the second largest bank in Russia with total revenues of US$11.2 billion and total assets of US$ 125.8 billion as of 2008. VTB is listed on the London and Moscow Stock Exchanges, and is 85.5 % owned by the Russian State. VTB is a major participant in the Russian infrastructure sector, offering financial advisory, debt/equity investments and hedging. The Copelouzos Group, a large, privately-owned business group in Greece, has its core activities in the oil and gas, power and infrastructure sectors as well as activities in real estate, advertising and PPP projects. Through its company Horizon Air Investments S.A, Copelouzos Group is also active in the airport sector and is a 5 % shareholder in Athens International Airport.

The total project cost is estimated at EUR 1.2 billion, to be financed by a combination of debt, equity and internal cash generation. The proposed IFC investment is to consist of (i) an A loan for IFC’s own account of EUR 50 million, (ii) a B loan for the account of IFC participants, currently estimated at up to EUR 100 million; and (iii) an IFC C loan (straight debt, back-ended repayment structure) of up to EUR 20 million.

67.37 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	67.37
Equity

* These investment figures are indicative

Pulkovo airport is located approximately 16km south of the center of St Petersburg. The airport has been in existence since 1932 and borders to the north the outer limits of the city, with an industrial and commercial area to the north east and residential properties mixed with light industrial facilities to the northwest. The eastern side of the airport borders the Pulkovskoe Highway, which also provides the main entrance to the airport. To the south and west of the airport are residential areas and farmland. Much of the neighboring areas have been developed since the airport started operations. The site is located on a low lying plain bounded to the west by the Gulf of Finland.

The Project is the first competitively and transparently procured airport concession in Russia and is expected to have a positive demonstrative effect for other planned PPP projects in Russia, which is of particular importance given the large infrastructure needs of the country. The Project will support the continued growth of the regional economy around St. Petersburg and improve a key infrastructure bottleneck. It is expected that Fraport’s role as lead operator will significantly improve the efficiency of airport operations as well as standards of service. The Project will also enhance the energy efficiency of the buildings at the airport.

IFC is expected to play a key role by ensuring that the Project meets the best international standards in terms of environment and health and safety, specifically by adhering to the Equator Principles and IFC environmental standards. By meeting international best standards, the Project is likely to have a demonstrative effect for other similarly structured projects in Russia in the future. IFC’s participation in the Project is also key to mobilizing commercial bank financing, as the Project is one of the first large scale PPPs in Russia and since financial market conditions remain challenging.

Key risks for this provisional category B project include: environmental and social management systems; occupational health and safety management including job hazard analyses and housekeeping; labor and working conditions; ambient air quality and air emissions; treatment and discharge of wastewater and run-off water; sustainable management of solid waste; historical subsurface contamination; aircraft noise and noise pollution; cultural and archeological heritage; fuel and hazardous materials storage and handling, including emergency response; asbestos-containing materials; and community engagement and consultation. The winning bidder consortium has significant experience in managing E&S issue associated with airport activities around the world and has engaged in conducting E&S due diligence and environmental baseline study with the City.