Deal is Bank’s third equity investment in Russian pharmaceutical sector

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The FINANCIAL — In a cross-border transaction, the EBRD has agreed to buy a minority equity stake of around 15 per cent in Russia’s privately-held OJSC Katren, the holding vehicle for pharmaceutical distributors operating in Russia, Ukraine, Kazakhstan and Belarus, as well as a retail pharmacy chain in Russia.

 

The proceeds of the EBRD’s investment in the group’s newly issued ordinary voting shares will be used to develop Katren’s warehousing capacity as well as providing funding for possible future acquisitions in the company’s existing spheres of activity, both in Russia and the wider regional market.

Other financial details of this transaction were not disclosed.

Within its market, Katren is the participant with the broadest geographical reach in the Commonwealth of Independent States.It is the third largest pharmaceutical distributor in Russia, the company’s core market, which accounted for 86 per cent of the group’s consolidated revenue in 2010. It is also among the top five distributors in Ukraine, Kazakhstan and Belarus.

The group’s results confirm its very cost-effective back-office and logistics operation compared not just to its local peers but also to international groups.

This transaction gives the EBRD the opportunity to support and add value to a home-grown Russian-owned and managed company which has a regional expansion strategy and has positioned itself as the most efficient and low cost distributor in the CIS.

Although due diligence undertaken by the Bank prior to today’s deal confirmed that the company met the majority of the EBRD’s basic corporate governance requirements, Katren has agreed to implement a comprehensive corporate governance action plan in order to achieve further improvements in a number of areas.

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Prior to this deal, the Bank had invested over €300 million in the pharmaceutical industry in nine of the EBRD’s 29 countries of operation. In Russia, the Bank’s previous equity investments included Petrovax and the Healthy People pharmacy chain.

This investment will give the EBRD the right to nominate two members for election to Katren’s board of directors.  Founded as ZAO NPK Katren in 1993, the group employs around 5,000 people in the CIS. The Company is controlled by its two founders. Ninety-seven employees are also shareholders of the Company.

The Bank was an indirect shareholder in Katren’s wholesale business in 2000-05 through its stake in the EBRD’s Western Siberia Regional Venture Fund, which was managed by Berkeley Capital Partners.

 

 

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