Kazakhstan: RG Brands Agribusiness Project

Nonsovereign Project | 46944-014

Summary

RG Brands Agribusiness Project

ADB will provide a 7 year corporate loan of up to $40.2 million to RG Brands, a leading food and beverage company in Kazakhstan. The company holds leading market shares in all its key products, particularly ultra-high temperature (UHT) milk, fruit juice, and tea. It plans to increase its revenues from $245 million in 2012 to $600 million in 2017. ADB will support this growth by providing long-tenor financing, which is not readily available for private sector companies in Kazakhstan since the 2008 2009 financial crisis.

The project consists of (i) the expansion of RG Brands' UHT milk and fruit juice production facilities ($14.9 million), (ii) investments to boost efficiency in production and distribution ($15.3 million), and (iii) the refinancing of debt maturing in the short term ($10.0 million). To better meet the needs of the company, ADB will provide $28.9 million in Kazakhstani tenge (through cross currency swaps) and $11.3 million in US dollar.

Latest Project Documents

Consulting Notices

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Project Name RG Brands Agribusiness Project
Project Number 46944-014
Borrower/Company RG BRANDS KAZAKHSTAN LLP
Country Kazakhstan
Location Kostanay (North of Kazakhstan) and Aksengir in Almaty Region (South of Kazakhstan)
Approval Number 7387/2997-002, 7387/2997-001
Type or Modality of Assistance
7387/2997-002 Loan US$ 30.20 million Approved
Strategic Agendas
Drivers of Change
Sector / Subsector Agriculture, natural resources and rural development - Agro-industry, marketing, and trade
Gender Equity and Mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Anshukant Taneja
Project Sponsor(s)
Description

RG Brands Agribusiness Project

ADB will provide a 7 year corporate loan of up to $40.2 million to RG Brands, a leading food and beverage company in Kazakhstan. The company holds leading market shares in all its key products, particularly ultra-high temperature (UHT) milk, fruit juice, and tea. It plans to increase its revenues from $245 million in 2012 to $600 million in 2017. ADB will support this growth by providing long-tenor financing, which is not readily available for private sector companies in Kazakhstan since the 2008 2009 financial crisis.

The project consists of (i) the expansion of RG Brands' UHT milk and fruit juice production facilities ($14.9 million), (ii) investments to boost efficiency in production and distribution ($15.3 million), and (iii) the refinancing of debt maturing in the short term ($10.0 million). To better meet the needs of the company, ADB will provide $28.9 million in Kazakhstani tenge (through cross currency swaps) and $11.3 million in US dollar.

Objectives and Scope RG Brands' growth will have a multiplier effect on local agriculture. Milk farmers and juice concentrate suppliers will expand their business in response to the company's growth. This will support an increase in agriculture GDP and employment. RG Brands' growth in neighboring markets will also contribute to higher export revenues for the country. Overall the intervention supports the diversification of the Kazakhstani economy outside the oil and gas sector.
Linkage to Country/Regional Strategy The project is fully consistent with ADB's Strategy 2020, the Operational Plan for Sustainable Food Security (2009), and the country partnership strategy for Kazakhstan (2012 2016), which call for increased private sector investments in agriculture and agribusiness to better connect local agriculture with urban and export markets.
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects In compliance with ADB's Safeguard Policy Statement (2009), the project is classified as category B for environment and category C for both involuntary resettlement and indigenous peoples. A corporate and compliance audit conducted on RG Brands' environmental and social management system (ESMS) and existing facilities showed that the company's systems on occupational health and safety and food safety are satisfactory. However, waste management and pollution control need to be improved. A corrective action plan has been prepared, which the company has committed to implement and which will be incorporated in the company's revised ESMS. An initial environmental examination and corresponding environmental management plan have been prepared for the proposed investment plan. RG Brands will ensure that the potential environmental and social impacts of the overall project are recognized, and that effective measures to avoid, minimize, mitigate, and compensate for the adverse impacts are incorporated in the safeguard plans. RG Brands has committed to step up its institutional capability to manage the project's social and environmental impacts, adopt an ESMS agreed on with ADB before the first disbursement, and submit annual monitoring reports. Information disclosure and consultations with affected people are conducted in accordance with ADB requirements.
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 27 Aug 2012
Due Diligence 04 Oct 2012
Credit Committee Meeting 11 Mar 2013
Approval 19 Apr 2013
PDS Creation Date 25 Mar 2013
Last PDS Update 17 Sep 2014

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
RG Brands Agribusiness Project Environment and Social Compliance Audit Reports Mar 2013

Evaluation Documents

See also: Independent Evaluation

No documents found.


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