Brunswick is a holding company incorporated in Bermuda which is in turn owned 35% by its two founders Mr. Martin Andersson and Mr. Gerard de Geer, 16.5% by Sumitomo, 9.8% by IFC and the balance by other shareholders and management.

The total cost of the project is estimated at $455 million. IFC’s proposed investment is an A loan of up to $50 million, a B loan of up to $50 million and an equity investment (either in BWL or parent Brunswick) of up to $25 million.

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity	25.0

* These investment figures are indicative

The Group’s railcars operate throughout the Former Soviet Union but particularly throughout the Russian Federation. Brunswick’s senior management is based in Moscow.

The Project would: (i) support the continued development of a key private sector player in the nascent Russian railcar leasing sector; (ii) contribute to the development of the transportation and logistics sectors in the Russian Federation, facilitating economic growth particularly in the economically disadvantaged hinterland; and (iii) by financing the construction of additional railcars, it would help avoid a supply crisis over the next 5-10 years as the bulk of RZhD's fleet reaches the end of its useful life. Most of Brunswick's fleet are unrelated to the oil sector and thus help facilitate the diversification of the economy. The availability of new, more reliable railcars would also help sustain the competitiveness of Russia's railway sector, mitigating the risk of trucking replacing railways with the attendant increase in harmful GHGs.

In supporting the further expansion of Brunswick's fleet, IFC would be directly supporting the continued development of one of the most competitive, best run players in the sector. It would build on previous engagements with the Group and assist with its continued growth and development helping it achieve the critical mass it needs to become a key long-term participant in the sector. This would stimulate competition and provide transportation companies with a viable alternative to owning railcars directly. As a key existing investor in Brunswick (both equity and debt), IFC s participation would also provide significant comfort to the other potential investors. There is limited appetite for 5-year corporate loans outside of the commodities sector in Russia at present and the IFC umbrella would help mobilize funds from the commercial debt market in particular. In the absence of IFC s involvement, Brunswick would have to scale back the loan package and likely reduce the amount of additional equity raised from outside investors. This would make it harder for Brunswick to achieve the scale it needs to prosper.

This remains a category B project because IFC’s ongoing review and supervision of the Group’s railcar leasing activities indicates that this additional investment will not result in any material change in the associated environmental and social risks and impacts. The current Environmental and Social Risk Rating for the existing investments is Excellent. Finally, and in the context of their prospective investment, EBRD also considers this a category B project.

Key issues for this repeat investment are essentially the same as those previously identified and include: environmental and social organization and management of leased railcars, including relationships with manufacturers and lessees; employee working conditions, including health, safety and training programs; and pollution control and waste management activities associated with railcar maintenance.