Financed ProjectsBulgaria Mezzanine Capital L.P.

Identification Code:

OP/12/0014

Total Operation Cost:

60.000.000

Maturity:

120 months

Operation Status:

Description and Purpose of the Operation:

The Bank has been invited to consider participating with EUR 10 million in Bulgaria Mezzanine Capital I ("BMC" or the "Fund"), a mezzanine finance fund set up for Bulgarian enterprises under the JEREMIE initiative of the European Investment Fund (EIF) in cooperation with the European Commission. The First Closing of the Fund is targeted for September 2013 at EUR 50-60 million. Depending on the interest of potential investors, a second (and Final) Closing will be possible within 6 months from the First Closing. The total commitments to the Fund are capped at EUR 80 million. EIF (under JEREMIE) will participate with 50% in the Fund, but not more than EUR 30 million. The Fund will focus on pure mezzanine investments in conservative deal structures with mezzanine tranches typically in the range EUR 2–5million with warrants and potentially equity co-investments. The Fund targets Bulgarian small and medium-sized enterprises ("SMEs"), but may also invest in "enlarged SMEs" (enterprises with up to 3,000 employees but with turnovers/total assets size within the ceiling for SMEs) and aims to support Bulgarian SMEs in their expansion. Sponsors: (i) Growth Capital Partners AG ("GCP"), an Austrian investment vehicle formed by key executives of the Mezzanine Management Group, a fund manager active in Central and Eastern Europe, (ii) Ivo Evgeniev, the co-founder and executive director of Rosslyn Capital Partners ("RCP"), a Bulgarian private equity fund manager (together the "Sponsors"). The Sponsors provide a complementary set-up, benefiting from synergies that create a strong partnership. The Fund will be a SICAR registered in Luxembourg.

Countries of Operation:

Bulgaria (100,00 %)

Financial Product:

Equity Investments

Sector:

Financial Institutions

Domain:

Private

Borrower/Client:

Bulgaria Mezzanine Capital I (to be established by the Sponsors as a Luxembourg SCS Sicar)

Co-Financiers/Participants:

EIF 50.0%; BSTDB 20.0%; other participants 30.0%

Guarantors/Sponsors:

Growth Capital Partners AG ("GCP"), an investment vehicle formed by key executives of the Mezzanine Management Group ("MM"); Ivo Evgeniev, the co-founder and executive director of Rosslyn Capital Partners ("RCP").

Developmental and Regional Cooperation Impact:

The BSTDB investment in the Fund is expected to have a positive development impact, given that the Fund will provide long-term funding to support expansion of SMEs/enlarged SMEs in an environment where access to such funding is scarce for these enterprises. The Operation is expected to: have positive impact on the businesses of BMC client companies, hence help maintain/create new jobs; have lasting impact on BMC portfolio companies (improved corporate governance, strengthened management etc.); leverage on the solid experience of the Sponsors in providing mezzanine funding and enable BSTDB to finance companies that otherwise would not be eligible for BSTDB direct funding (because of their small size).

Environmental Classification and Impact (summary):

According to the Bank's environmental screening the Operation has been assigned category Financial Institutions (FI). The environmental due diligence concluded that the Fund has adopted and implements the environmental and social guidelines for International Financial Institutions (IFIs). Thus, all the new investments are initially screened against the environmental and social categorization into low, medium and high risk transactions; medium and high risk ones are subject to due diligence which also involves dialogue with shareholders in order to assess the critical environmental and social issues and ensure compliance with applicable local environmental and labor legislation; the investment decisions also take into account the environmental and social terms and conditions, including monitoring arrangements of these transactions. The Fund retains appropriate staff in charge for environmental and social assessment of its investments.

Operation Leader:

General Industries, Transport, Tourism 2

E-mail:

gitt2@bstdb.org