31667 - Project Sava

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Summary of Proposed Investment

Project Number

31667

Company Name

MK GROUP DOO

Date SPI Disclosed

Apr 4, 2012

Country

Serbia

Industry

Agribusiness and Forestry

Projected Board Date

May 7, 2012

Status

Completed

Sector

Diversified Edible Agricultural Crops Production

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Jun 6, 2012
Signed : Jun 14, 2012
Invested : Aug 3, 2012

Project Description

MK Group d.o.o. (the “MK Group”, or the “Group”), a leading vertically-integrated agro-industrial conglomerate with vast the majority of its operations in Serbia, has embarked on a €87 million investment plan which comprises: (i) the acquisition of Carnex AD Meat Industry (“Carnex”), the Serbian brand leader in processed meat products; (ii) the upgrade and expansion of Carnex’s vertically-integrated operations; (iii) the expansion and modernization of the Group’s primary agriculture operations; and, (iv) permanent working capital to support the growth of the Group''s operations (the “Project”). The Project will enable the Group to further diversify and expand its operations vertically and horizontally in sectors where it already operates as well as adjacent industries, namely livestock and meat production. Thereby, the Project is expected to increase the size, strength and sustainability of MK Group’s operations.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	55.82
Equity

Development Impact

The development impact of the Project is expected to include: (i) Operational turnaround and efficiency improvements at Carnex, a large employer and former regional leader; (ii) Support to an agricultural company involved in value-added production in a sector important to Serbia''s economy; (iii) Extend the MK Goup''s reach to farmers and imporve agricultural infrastructure; (iv) demonstration effect by encouraging other companies to invest in the region; and (vi) increased tax revenues.

IFC is well positioned to assist the Group with long-term financing to ensure its future growth and further improve its business sustainability. IFC''s expected additionality includes:
(i) enabling the company to conservatively leverage its growth through acquisition and investment upgrades by providing financing at reasonable rates and longer tenors appropriate for the type of investment and not otherwise available in the country;
(ii) diversifying the Group''s funding base;
(iii) sharing its global and industry knowledge as the Group enters new product segments; and,
In addition, the Group has expressed interest in IFC providing corporate governance advice in advance of a possible listing in the mid-term.

The Project has limited potential adverse environmental and social impacts, and those that do exist are being site-specific and can be resolved through the application of good international industry practices. This corporate-level investment is therefore a provisional Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. A detailed description of IFC’s environmental and social due diligence of this investment can be found in the Environmental and Social Review Summary (ESRS), which is also available on IFC’s website at http://www.ifc.org/projects

Contacts

For Inquiries About the Project, Contact

Milica Lukic, MK Group
Bulevar Mihaila Pupina 115e, 11070 Novi Beograd, Serbia
Phone: + 381 11 35 39 528

Dusko Marjan, Carnex
Kulski put 26, 21460 Vrbas, Serbia
Phone: +381 21 7953 609

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

Environmental documentation will be made available at the headquarters of MK Group and Carnex.

MK Group,
Bulevar Mihaila Pupina 115e, 11070 Novi Beograd, Serbia

Carnex,
Kulski put 26, 21460 Vrbas, Serbia

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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