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| Crimson Capital Selected Projects - Europe and Aurasia
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Kosovo Crimson Finance Fund
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| Crimson Capital |
2008
- Ongoing
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Crimson Capital has secured funding and developed an SME Fund in Kosovo based on the highly successful Macedonia SME Finance Fund model. The Kosovo Finance Fund is an innovative non-bank financial institution that will be uniquely positioned in the Kosovar marketplace, addressing the needs of entrepreneurs and businesses that are not being adequately served by existing institutions. It will provide critical financing to Kosovar businesses in sectors which have been underserved previously, including women, rural, and minority owned enterprises.
Loans from the Kosovo Finance Fund will increase sales, profits, jobs, productivity, competitiveness, and credit-worthiness of its clients, by helping these businesses become “bankable” for micro finance institutions and banks. The Fund will bring innovation, customer orientation, and leadership to the financially underserved segments of the Kosovo market, and will make its financing available to all regions of Kosovo and across all industry sectors. The SME Fund will begin lending in the third quarter of 2008.
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Kosovo Economic Management for Stability and Growth (EMSG) Project
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Crimson Capital is providing advisory services to the Ministry of Energy and Mining (MEM), the Project Steering Committee (PSC) of the Lignite Power Technical Assistance Project (LPTAP), and the Government of Kosovo for reform in the energy sector. Activities include assistance on the development of the 3 billion EUR LPTAP program consisting of a new lignite mine and 2,000 MW lignite-fired power plant, future disposition of existing power plants, legal and regulatory reform, and the privatization to a foreign strategic investor of the distribution and supply functions of Korporata Energjetike e Kosova (KEK), the electric utility. Crimson Capital is a subcontractor to BearingPoint on this activity.
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Macedonia SME Commercial Finance Fund
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| USAID, NORFUND, Crimson Capital |
2003
- Ongoing
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http://www.smef.com.mk
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As prime contractor, Crimson designed and manages this $3 million fund to provide innovative, short-term working capital finance products to micro, small, and medium enterprises (MSME) in Macedonia. The Fund directly targets the problem of the “missing middle,” in which the vast majority of companies in developing countries cannot obtain short-term working capital financing needed to grow, employ more people, increase exports, and become competitive and viable for the long-term. The fund utilizes products such as purchase order finance and pre-export financing to fill address the lending needs of the SME sector.
In just over four years of lending, the SME Fund has supplied over 190 loans totaling more than $13.6 million to Macedonian MSMEs, and has created more than 1226 new permanent jobs, including over 688 jobs for women and 155 for minorities. SME Fund loans have stimulated an average yearly increase of 25% in revenues and 780% in profits for client MSMEs, and have generated $47.4 million in new exports. The SME Fund recently received new investment from European investors, doubling its size to more than $3 million in lending capital. The SME Fund has extended loans to all regions of Macedonia, and in all major sectors of the economy, including food processing, trade, textiles, IT, leather goods, and construction materials.
“The Performance of the SME Fund in Macedonia has far exceeded our expectations. It has been successful and it has served as a model for USAID
and Crimson SME Lending programs in other countries.”
Richard Goldman, Mission Director, USAID Macedonia
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Macedonia Agribusiness Activity (MAA)
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Crimson Capital is partners with ARD, Inc. on this newly awarded project under the RAISE Plus IQC. MAA will primarily work in two areas, pre and post harvest in key agricultural value chains in Macedonia to help increase value added sales and exports by helping processors and producers compete more effectively.
Crimson will utilize its 11 years of experience in Macedonia to help link agribusinesses with finance, investment, and trade opportunities. Through Crimson’s SME Finance Fund as well as other local banks and financial institutions, Crimson’s team will help Macedonia business source capital to enable them to expand and improve production as well as to increase orders. Crimson’s team has already developed a Finance Manual for agribusinesses to help them access finance opportunities and be better prepared to approach lenders and potential investors.
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Competitive Enhancement and Enterprise Development (CEED) Project in Moldova
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CEED seeks to enhance the competitiveness of Moldovan private enterprises in the global market and to foster a supportive business environment that stimulates and rewards vibrant economic growth. CEED is working to develop industry clusters of the Moldovan economy such as wine, textiles/apparel, and information and communications technology.
Crimson’s focus areas under CEED are increasing access to finance for Moldovan enterprises with the development of new trade financing products, and expanding trade and investment opportunities in the targeted industry clusters. Crimson’s exports have already completed a detailed analysis of trade finance and are developing a framework for interventions under CEED to catalyze increased lending and development and enhancement of new trade finance products.
CEED has selected two partner banks to implement this program and Crimson’s experts are providing hands on training to introduce purchase order financing and other products to the Moldovan market. Already, partner financial institutions have introduced purchase order finance to the Moldovan market, extending more than $1.7 million in pilot loans resulting in over $3.8 million in sales and exports. This pilot program has achieved substantial leverage effects in terms of results of the new loans. To date, the program continues to generate a total POF loan portfolio that is more than 7 times the total cost of assistance provided. Sales generated from the POF loans are already more than 21 times the total cost of assistance provided. Three additional banks have signed up for the program and will begin introducing POF in 2008.
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Cluster and Business Support in Kosovo (KCBS)
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Under the SEGIR II Privatization IQC, Crimson is assisting Chemonics International in project implementation. Employing an integrated approach and cluster-based strategy, KCBS is energizing functioning value chains to stimulate employment, sales, finance, and investment in key sectors such as meat, dairy, eggs, animal feed, fruit and vegetables, and construction materials.
Crimson professionals are developed strategies to overcome legal and regulatory barriers as well as to improve access to finance for key industries. Based on an analysis of the existing finance sector, completion of relevant sector studies, and determination of the gaps in the market, Crimson developed the Concept Paper and draft Action Plan for a new DCA Bond Guarantee with Raiffeisen Bank Kosovo. To increase lending opportunities, Crimson also designed and implemented two Finance Fairs, linking hundreds of businesses directly to financial institutions to receive loans and investments. In 2006, Crimson provided technical support and assistance to facilitate new joint venture operations in the construction sector, valued at several million Euros.
Currently, Crimson’s finance experts are introducing a new program to introduce leasing and purchase order finance to the Kosovo market. Through this intervention, Bank for Business in Kosovo has already begun leasing of vehicles. Crimson also provided technical expertise to the construction and building materials sector, to help increase the productivity and competitiveness of partner businesses.
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Armenia Micro Enterprise Development Initiative (MEDI)
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MEDI is designed to strengthen the business and enabling environment for Armenian micro and small enterprises (MSEs) by increasing access to financial services, improving MSE capacity through sustainable Business Development Services (BDS), reforming the legal, regulatory, and policy framework, and enhancing trade and investment opportunities. Crimson has provided technical assistance and training to eight leading Armenian banks to introduce Purchase Order Financing (POF) and other types of trade finance to the Armenian MSME market.
The results: 52 new trade finance loans (including POF) totaling $5.8 million. To widen understanding and use of this type of financing, Crimson organized three MSME Finance Workshops with representatives of all leading Armenian banks and the Central Bank of Armenia (“CBA”), as well as a business-to-business meeting (B2B) on finance issues between the banks and MSMEs. Crimson also orchestrated a B2B meeting for Armenian and Georgian firms in the construction and building materials sectors, bringing together 70 firms and organizations to meet each other and conduct business from buying and selling products and services to developing partnerships.
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Privatization and Restructuring of the Macedonia Electricity Company (Elektrostopantsvo na Makedonija ESM))
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| Government of Macedonia |
2002
- 2006
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Crimson is co-lead investment bank with the Meinl Bank Consortium (MBC), with responsibility for advising the Government of Macedonia(GOM) on the unbundling, restructuring, and privatization of the vertically integrated electric power utility ESM.
The project targets reform of the legal and policy framework for the energy sector and restructuring of the regional electricity market, working towards compliance with the Athens Protocol. Program components include:
- Creating detailed restructuring plans
- Assuring due diligence in technical, commercial, financial, tax, and legal frameworks
- Delivering recommendations on the structure and regulation of the electricity market in line with European standards
- Preparing and implementing actual restructuring and privatization
Crimson assisted the GOM in obtaining a key $45 million USD pre-privatization investment from the EBRD for ESM and is a member of the government’s steering committee for the restructuring and privatization of the energy sector. On March 17, 2006, the GOM approved the sale of 90% of AD ESM, the Macedonian Electricity Distribution Company, to the Austrian utility EVN AG for €225 million, along with an investment commitment of €96 million, and secured a regional record price per distribution customer. European and Macedonian press and Transparency International praised the successful privatization transaction, both for the amount paid and the professionalism and openness of the process.
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Kosovo Business Support Program (KBS)
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KBS deployed technical assistance to Kosovar companies and agribusinesses to achieve viability and competitiveness by improving their operations, finance, marketing, and ability to attract financing. Developing sustainable local capacity for Business Development Services (BDS) and building new trade and investment linkages comprised Crimson’s major foci under this program.
Crimson put together 22 B2B meetings and 12 trade fairs with 893 Kosovar businesses attending, resulting in over €25 million from 712 new trade and investment transactions. Crimson’s long-term consultant managed the Northern Kosovo Office for better regional cooperation with Serbia, and its short-term consultants applied their talents to improve accounting/auditing training and certification, multiplying trade and investment in B2B relationships, and boosting the competitiveness of the textile sector. KBS collaborated with over 1000 SMEs and helped 718 of its participant firms to realize a 20% increase in sales. Operational profitability at 1,675 firms increased by 5% or more, with over 1,651 new jobs created.
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Macedonian Business Resource Center (MBRC)
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www.mbrc.com.mk
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USAID and Crimson Crimson established the MBRC to help Macedonian businesses streamline and strengthen their competitiveness, financial management, operations, service delivery, and marketing. The project enhanced local ability to export their products, raise capital and attract join venture partnerships.
Over 350 companies benefited from improvements and restructuring, and the MBRC trained 4,500 local managers, consultants, and government officials in 40 key subject areas. During the last three years of the project, MBRC facilitated over $95 million in trade and investment in more than 1,100 transactions. The MBRC also focused on capacity building, and incubated and spun out six independent, sustainable local entities which are now 100% self-supporting, including 4 consulting firms and 2 NGOs.
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USAID Restructuring Team to the Czech Ministry of Industry and Trade and to Komercni Banka
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The team, including Crimson experts, delivered training, technical restructuring assistance, and policy/legal advice to Czech companies, the Ministry of Industry and Trade, managers of select companies, and the Problem Loan Department of Komercni Banka, one of the largest commercial banks in CEE. The project concentrated on the areas of financial and operational restructuring, privatization, foreign investment, joint ventures, policies and procedures for strategic industries, and institutional strengthening. The team successfully restructured 12 of the largest and most important companies, doubling the expected benchmark of restructuring six companies.
Crimson parlayed its successful experience on this project into conducting a similar, intensive training program in privatization and restructuring for the Romanian Restructuring Agency.
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USAID Advisory Team to the Czech Ministries of Privatization, Industry and Trade and National Property Fund
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This team provided technical assistance, policy/legal advice, institutional assessments, and training for rapid market reform and independent, sustained capacity building to the Czech Government. The project accomplished dramatic changes in privatization policies, restructuring, foreign direct investment, environmental protection, remediation and indemnification, enabling legislation, training and institution building, and fairness and transparency.
Crimson’s privatization program in the Czech Republic is heralded as one of the most successful privatization programs anywhere. Crimson worked with 13 of the 20 largest employers in the country, 26 of the 50 largest companies, and all 16 regional electricity and natural gas distributors. The project catalyzed over 145 foreign investor privatization transactions, and contributed to the raising of over $5 billion in new foreign direct investment into Czech companies. In all, over 200 companies with assets over $10 billion successfully privatized.
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