The FINANCIAL — The EBRD has, through an EUR 10 million investment, acquired a minority stake in Hlebprom, a leading Russian cake and biscuit producer which has developed its own national distribution system.
The funding will mainly be used to upgrade the privately-owned company’s existing plants so as to increase efficiency and productivity.
The acquisition by the EBRD, a significant investor in Russia’s agribusiness sector, will encourage Hlebprom to purchase more raw materials from domestic suppliers, particularly cream and butter, thus stimulating the development of higher-grade products by Russian dairy farmers in order to meet the company’s quality standards.
“This transaction is a good example of how the EBRD can stimulate primary agricultural production in Russia through its investments in processing and other segments of the agribusiness sector,” said Gilles Mettetal, the EBRD’s Director of Agribusiness.
“The Bank also welcomes Hlebprom’s commitment to streamline its corporate structure and raise corporate governance standards by adopting various best practices,” Mr. Mettetal added.
Hlebprom, founded in 1982 and privatised in 1994, specialises in producing flour-based confectionaries and chilled cakes which are mainly sold through supermarket chains. The company’s main plant is in the city of Chelyabinsk, in Russia’s industrial heartland.
It manages 15 regional distribution centres across Russia where its bakery products are stored and prepared prior to final delivery to stores.
As part of the investment agreement, Hlebprom will implement an Environmental and Social Action Plan at its facilities, as agreed with the EBRD.
“We welcome EBRD as our new partner, helping us to finance improvements to our production facilities, which will allow us to improve our product offering to consumers all over the Russian Federation”, said Anton Gubkin, the General Director of Hlebprom.
In the agribusiness sector alone the EBRD has directly committed over EUR 6.4 billion (in over 420 projects across central and eastern Europe and the Commonwealth of Independent States since 1991. The relevant EBRD agribusiness figures for Russia in that same period are over 70 projects totalling EUR 1.9 billion.