Agrokor is a leading food and retail company in the CEE region, with over 36,000 staff, and operations in Croatia, Serbia, Bosnia and Herzegovina, Macedonia, Montenegro, Slovenia and Hungary. Over the last thirty years, Agrokor has expanded from a small family business for flower and trade, into a private company generating revenues in excess of €3.6 billion, owned 91.7% by Mr. Ivica Todoric, the founder and President, and 8.3% by EBRD.

Agrokor owns 95.83% of Frikom. The minority holding in Frikom is owned by the Serbian privatization fund (3.75%) and other small shareholders. Nova Sloga is 100.00% owned by Frikom.

The total Project cost is estimated at €40 million, which is proposed to be financed with a €40 million loan investment, of which €30 million will be an A Loan on IFC’s own account, and the remaining €10 million to be in the form of a parallel commercial loan.

32.56 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	32.56
Equity

* These investment figures are indicative

Frikom’s ice-cream and cold storage plants are located in Belgrade, Serbia. Nova Sloga is located in Serbia, in the Rasina area, which is renown as a rich agricultural area with over 160,000 hectares of arable land.

The proposed Project supports the continued regional growth of an emerging market player, and also develops a local supply chain for small fruit and vegetable farmers:

- Private Sector Development: Support privatization, rehabilitation and improve the productivity of formerly state-owned assets;
- Employment: Safeguard employment at Nova Sloga, including a large number in rural areas;
- Farmer benefits: Strengthen the competitiveness of vegetable supply chain by providing reliable access to market and technical assistance to farmers;
- SME development: companies like Frikom (and eventually Nova Sloga after its turnaround) are the local engines of supply chains, upstream supporting farmers by providing a reliable off-take of fruits and vegetables, and downstream by supplying retail and distribution networks;
- Community development: the construction of a local supermarket (there is none within a 60 km radius), the local presence of an off-taker for produce with credible infrastructure on the ground, the availability of technical assistance for horticulture will support rural and community development;
- Tax-payer benefit: Increase taxes paid and decrease in state support to a loss making state-owned enterprise;
- Quality Management Certification: Improve E&S management and quality certification at Frikom, and support introduction of E&S management and certification process at Nova Sloga.     

Long-term financing: IFC financed Frikom with an 18 months loan during the crisis in 2009, sending a signal of confidence by providing necessary liquidity amid difficult times in the credit markets. With the proposed financing, IFC aims to further support Frikom with a more sustainable long-term solution by way of a longer term loan, the market for which is not sufficiently deep in Serbia. IFC''s longer maturity is needed to develop the currently weak agricultural supply chain in Rasina''s region. The payback period of such investments in capital expenditure (equipment, warehouses, waste treatment, and land acquisitions) and intangibles (staff and cooperants training, food safety, and quality certifications) is of several years.

Environmental and Social Standards: IFC''s involvement in the Project would help Agrokor scale up sustainable environmental and social practices and disseminate best practices to another core business of the Group in another country. Frikom and Nova Sloga will benefit from IFC''s environmental and social review, benchmarking them against international best practices, and providing guiding steps to improve environmental and social management practices as part of the Project. The extended maturity will allow further implementation and supervision of the EAP.

Cleaner Production: IFC is providing Frikom with Advisory Services to identify and implement cleaner production opportunities to conserve water, save energy and reduce operating costs.     

This Category B project has limited impacts that will be resolved through the application of good international industry practices, the Environmental Action Plan and IFC performance standards and applicable sections of EHS guidelines. Apart from upgrading wastewater treatment systems, there are unlikely to be significant issues associated with Frikom''s frozen food, pastry, ice cream and bottled mineral water plants. Frikom’s production facilities in Serbia are ISO 9001(Quality Management) and Hazard Analysis of Critical Control Points (Food Safety) certified to Codex Alimentarius. Frikom has also started clean production program activities in cooperation with IFC. Further strengthening of food safety in field and processing activities, occupational health and safety, accident reduction programs and resolution of incomplete wastewater treatment are addressed in the environmental action plan (EAP) which Frikom has already started to implement. Frikom''s good practices will also be extended to Nova Sloga in line with EAP.