The Netherlands Development Finance Company (FMO) arranged a USD 25 million loan to Azerbaijan’s oldest bank DemirBank.
USD 12.5 million is provided by FMO, USD 7.5 million by the Development Bank of Austria (OeEB) and further loans amounting to a total of USD 5 million are syndicated to three commercial financial institutions: Raiffeisen Bank International AG, DemirHalk Bank N.V. and Atlantic Forfaitierungs AG. This transaction is the third syndicated loan received by DemirBank, which constitutes the largest borrowing for DemirBank since the bank’s inception and will help DemirBank to enhance its lending activity to micro, small and medium-sized businesses in Azerbaijan.
A relevant feature of this transaction is the maturity, which is considerably longer than what is currently available for Azerbaijani banks for a similar facility. The FMO and OeEB portions of the loan have a tenor of five years. Azerbaijani borrowers normally have access to syndicated loans with a maximum maturity of three years.
According to Roman Amirjanov, Chairman of the Board at DemirBank, the received funding in combination with existing capacities will help the bank to contribute more to private entrepreneurship, particularly to the small and medium business segment. Also, success of this transaction will further facilitate access to the international commercial debt markets and extend partnerships between DemirBank and numerous International Financial Institutions in the future.
"At FMO we value entrepreneurship as one of the main drivers for economic development," said Nanno Kleiterp. "This long-term commitment to Demirbank will help to further increase access to finance for SMEs and micro-sized Azerbaijani businesses, boosting entrepreneurship in Azerbaijan. FMO is proud to have syndicated three commercial participants in this loan."
"Supporting small and medium enterprises is key for further development of the private sector in Azerbaijan," said Andrea Hagmann, Member of the Executive Board of OeEB. "The loan for DemirBank will strongly contribute to economic growth and open new possibilities for cooperation between Azeri and Austrian companies."
Oesterreichische Entwicklungsbank AG (OeEB) has been operating as the official Development Bank of Austria since March 2008. It is specialized in the provision of long-term finance for the implementation of private sector projects in developing countries which create sustainable development. OeEB provides tailor-made financing solutions for a diverse set of long-term investments that would otherwise find it difficult to raise funding or borrow money in international capital markets. Additionally OeEB provides Technical Assistance (Advisory Programmes) which can be used to enhance the developmental impact of projects.
DemirBank (former "Azerdemiryolbank" OJSC) established in 1989 is 25%+1 share owned by the European Bank for Reconstruction and Development (EBRD) and 10% owned by Netherlands Development Finance Company (FMO).
DemirBank actively cooperates on various financing programs with more than 30 international financial institutions, such as European Bank for Reconstruction and Development (EBRD), Netherlands Development Finance Company (FMO), International Finance Corporation (IFC), Black Sea Trade and Development Bank (BSTDB), Kreditanstalt fuer Wiederaufbau (KfW), German Investment and Development Company (DEG), OPEC Fund for International Development (OFID), US Agency for International Development (USAID), Asian Development Bank (ADB), responsAbility SICAV, etc.
The Netherlands Development Finance Company (FMO) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on four sectors that have high development impact: financial institutions, energy, housing, and agribusiness. With an investment portfolio of EURO 5 billion, FMO is one of the largest bilateral private sector development banks.