The Fund has been incorporated in Luxembourg as a structured vehicle comprised of four types of securities: (i) junior C shares, (ii) mezzanine B shares, (iii) senior A shares, and (iv) senior notes. The C share issue represents the first loss cushion and will be fully subordinated to all other classes of securities issued. The European Commission (EC) has committed EUR19.6 million for the first-loss tranche. In addition, KfW, EIB, and the European Bank for Reconstruction and Development (EBRD) each committed EUR20.4 million in the A shares and EUR4.6 million in the B shares. In total, the commitments equaled EUR95 million in the first closing in December 2009.

The Fund will be managed by Oppenheim Asset Management Services, part of Sal. Oppenheim, a leading private banking and asset management group in Europe, in consortium with the fund advisor, Finance in Motion. This follows the fund management arrangement in the European Fund for Southeast Europe (EFSE) where IFC is an investor. In addition, MACS Management & Consulting Services has been contracted as a sub-advisor to provide technical expertise in the area of sustainable energy.

The total project cost is estimated at EUR400 million. IFC intends to invest up to EUR25 million in senior A shares and mezzanine B shares of the Fund.

31.04 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	31.04
Equity

* These investment figures are indicative

The Fund’s investments are initially targeted to Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR of Macedonia, Montenegro, Serbia, and Turkey.

The project is expected to have a significant developmental impact in promoting energy efficiency and renewable energy and expanding lending to households, small and medium enterprises including ESCOs, municipalities and public sector entities in Southeast Europe and Turkey. Among key developmental impacts can be listed:

Broadening access to sustainable energy finance: The project will increase the availability, and therefore access to sustainable energy finance in the region, it will help to create new banking products that allow actors to make energy efficiency investments that will contribute to reduced local pollution, reduced energy bills, increased energy security and it will support climate change mitigation.

Demonstration effects of improved energy efficiency among sub-borrowers: The Project will demonstrate the benefits of energy conservation and promote the expansion of energy efficiency and renewable energy lending in the energy inefficient Western Balkan economies and Turkey. The project is also expected to transfer and build additional expertise related to sustainable energy investment among banks, particularly in the area of assessing the risk and creditworthiness of clients for energy efficiency loans.

IFC''s investment would signal confidence in the Fund and help focus investor attention (especially private) on renewable energy and energy efficiency, an area which remains relatively new in emerging markets.

IFC''s appraisal will focus on the Fund''s capacity to  manage S&E risks associated with energy efficiency financing through on-lending through financial institutions to SMEs, private  households, municipalities, public sector entities and small renewable energy projects as well as direct lending to energy service companies, larger industrial companies, and small renewable energy projects. Particular focus will be given to the Fund''s capacity to implement a Social & Environmental Management System (SEMS) to screen direct lending activities against the IFC Exclusion List, national laws, and the IFC Performance Standards, as well as ensuring that a process is in place for financial institutions to develop a similar system to do the same. IFC will review the fund manager''s past experience with implementing an SEMS as well as the Fund''s existing S&E due diligence procedures. If considered necessary, the Fund will be required to ensure the enhancements to the SEMS are made as a condition of IFC''s commitment. The Fund will also be required to ensure adequate capacity to implement the SEMS.