INVESTMENT OPPORTUNITIES FOR SWISS COMPANIES IN THE … · 2014-02-10 · 2 contents russian-swiss trade relations 3 russian-swiss investment cooperation 4 investment projects of

INVESTMENT OPPORTUNITIES FOR SWISS COMPANIES IN THE NORTH CAUCASUS FEDERAL DISTRICT

MARCH 2014

WWW.KRSKFO.RU 2

CONTENTS

RUSSIAN-SWISS TRADE RELATIONS 3

RUSSIAN-SWISS INVESTMENT COOPERATION 4

INVESTMENT PROJECTS OF SWISS COMPANIES IN RUSSIA 5

NORTH CAUCASUS FEDERAL DISTRICT (NCFD): OVERVIEW 6

NCFD KEY ECONOMIC INDICATORS 7

WHY NORTH CAUCASUS? 8

NORTH CAUCASUS DEVELOPMENT CORPORATION (NCDC): COMPANY OVERVIEW 9

BUSINESS LINES AND AREAS OF ACTIVITY 10

NCDC’S INVESTMENT CRITERIA 11

NCDC’S BUSINESS LINES AND AREAS OF ACTIVITY 12

IMPLEMENTED INVESTMENT PROJECTS 13-16

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RUSSIAN-SWISS TRADE RELATIONS

2,0 2,4 3,0 3,0 2,1

2009 2010 2011 2012 1Q-3Q 2013

VOLUME OF SWISS EXPORTS TO RUSSIA, BLN USD

6,2

8,7

11,4 10,5

7,2

2009 2010 2011 2012 1Q-3Q 2013

VOLUME OF RUSSIAN EXPORTS TO SWITZERLAND, BLN USD

SWITZERLAND IS ONE OF RUSSIA’S IMPORTANT TRADING PARTNERS IN EUROPE. A RECENT SLOWDOWN IN THE WORLD ECONOMY HAD NO MAJOR IMPACT ON TRADE RELATIONS.

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32%

17%

9%

8%

7%

27%

STRUCTURE OF SWISS EXPORTS TO RUSSIA, %

Pharmaceuticals

Machinery and equipment (general)

Clocks and watches

Electrical machinery and equipment

Optical, photographic and otherinstruments and apparatus

Other

42%

17%

12%

5%

4%

20%

STRUCTURE OF RUSSIAN EXPORTS TO SWITZERLAND, %

Precious stones and metals

Inorganic chemicals; compounds ofprecious metals

Aluminium and aluminium products

Mineral fuels, mineral oils and products oftheir distillation

Rubber and articles thereof

Other

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...

RUSSIAN-SWISS INVESTMENT COOPERATION

4 682 5 596

6 555

4 360 5 230

2009 2010 2011 2012 1Q-3Q 2013

ACCUMULATED SWISS INVESTMENTS IN RUSSIA, MLN USD

THERE ARE MORE THAN 600 COMPANIES WITH SWISS EQUITY PARTICIPATION REGISTERED IN RUSSIA. THE BIGGEST SWISS INVESTORS IN RUSSIA ARE NESTLE, THE ABB ASEA BROWN BOVERI GROUP, SCHINDLER GROUP.

FOCUS INDUSTRIES FOR SWISS INVESTMENT IN RUSSIA

Pharmaceutics Food Processing Agribusiness Chemical Industry

Mechanical Engineering Medical Diagnostics Hotels Construction Materials

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COMPANY INDUSTRY SIZE OF INVESTMENTS Region(s)

Food Processing >1,5 billion USD Moscow, Saratov, Vologda, Krasnodar, Perm, Kaluga, Vladimir regions

Construction Materials 900 mln euro Moscow and Saratov regions

Woodworking >350 mln euro

Kostroma region

Hotels n/a Moscow, St. Peterburg, Krasnodar region

Mechanical Engineering 300 mln euro Moscow

Metallurgy 40 mln USD Kostroma region

INVESTMENT PROJECTS OF SWISS COMPANIES IN RUSSIA

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Sources: Territorial Bodies of the Federal State Statistics Service

1 2012 data (estimations); 2 2012 data

GRP – Gross Regional Product

CAPITAL: Cherkessk AREA: 14.3 thousand sq. km POPULATION2: 474,7 thousand GRP1: 51,9 billon RUR

CAPITAL: Stavropol AREA: 66.2 thousand sq. km POPULATION2: 2 787 thousand GRP1: 441,3 billon RUR

CAPITAL: Nalchik AREA: 12.5 thousand sq. km POPULATION2: 859 thousand GRP1: 94,9 billon RUR

CAPITAL: Vladikavkaz AREA: 8 thousand sq. km POPULATION2: 709 thousand GRP1: 101,3 billon RUR

CAPITAL: Grozny AREA: 15.6 thousand sq. km POPULATION2: 1 302,2 thousand GRP1: 83,8 billon RUR

CAPITAL: Magas AREA: 3.6 thousand sq. km POPULATION2: 430,5 thousand GRP1: 26,6 billon RUR

CAPITAL: Makhachkala AREA: 50.3 thousand sq. km POPULATION2: 2 930,5 thousand GRP1: 362,8 billon RUR

STAVROPOL KRAI

KARACHAEVO-CHERKESSIA

KABARDINO-BALKARIA INGUSHETIA

CHECHNIA

DAGESTAN

NORTH OSSETIA-ALANIA

RUSSIAN FEDERATION

NORTH CAUCASUS FEDERAL DISTRICT (NCFD): OVERVIEW

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31,5

14,5

14,3

12,4

7,4

4,9

4,0

3,4 2,5

2,3 2,9

Processing industries Transport and communications

Utilities Construction

Trade Agribusiness

Real Estate Healthcare

Hotels and restaurants Mining

Other

STRUCTURE OF REGIONAL ECONOMY I H 2013 %

SALES OF GOODS, WORKS AND SERVICES IN 1Q-3Q 013 %

(%) compared to

Jan-Sep of 2012 Total Mining Processing Utilities

RUSSIAN FEDERATION 100,1 101,1 99,7 99,5

NCFD 102,8 95,9 105,2 95,5

Republic of Dagestan 103,5 93,6 95,7 136,6

Republic of Ingushetia 112,7 112,4 110,9 153,4

Kabardino-Balkar Republic

90,5 104,6 87,3 111,8

Karachay–Cherkess Republic

95,4 102,6 92,7 100,6

Republic of North

Ossetia-Alania 130,7 99,7 137,6 111,9

Chechen Republic 94,2 90,6 111,6 118,8

Stavropol region 102,8 96,6 108,2 81,0

NCFD KEY ECONOMIC INDICATORS

NORTH CAUCASUS FEDERAL DISTRICT GROWTH RATES ARE HIGHER THAN THE RUSSIAN FEDERATION AVERAGE

1 2

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WHY NORTH CAUCASUS?

• State corporation Vnesheconombank;

• North Caucasus Development Corporation;

• Northern Caucasus Resorts.

• Caucasian Mineral Waters;

• Health-improving tourism, moun-taineering, extreme sports, religious pilgrimage.

• Mineralnye Vody airport;

• High density of railways and roads;

• Makhachkala sea port.

• The share of young population (14-30 years old) is 27% (higher than the average level in Russia)

• The only labor excessive region of Russia

• NCFD is one of the major agricultural regions in Russia accounting for 6,7% of the overall national production;

• Agricultural lands: 113 500 sq. km; 53 900 sq. km of arable lands.

• High quality black-earth soil and easy access to irrigation

• The climate of the NCFD is the warmest in Russia;

• The average temperature in January is – 3,2° С, in July +20,4°C.

• State and Federal Target Development Programs;

• Investors may rely upon the public guarantee of up to 70% of the total loan amount.

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POWERFUL SHAREHOLDER

LOCAL KNOWLEDGE

COOPERATION WITH REGIONAL AUTHORITIES

NCDC was established to help in implementation of the Comprehensive NC Development Strategy, approved by the Russian government

NCDC closely cooperates with the Office of the Representative of the President of Russian Federation in North Caucasus Federal District and regional administrations

NCDC is 100% subsidiary of state corporation Vnesheconombank (VEB) – the state development bank

NORTH CAUCASUS DEVELOPMENT CORPORATION (NCDC): COMPANY OVERVIEW

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BUSINESS LINES AND AREAS OF ACTIVITY

NCDC IS AN EFFECTIVE MECHANISM FOR DEVELOPMENT OF THE NCFD’S INVESTMENT ENVIRONMENT

NCDC provides equity invest-ment for commercially feasible and strategically important development projects

NCDC assists project initiators in attracting equity and debt financing, provides consulting services to accelerate the development of clusters and implementation of strategically important projects

NCDC aims to improve the perception of the NCFD as an open and transparent region within business community and general public by participation in forums and conferences, establishing the NCFD investment portal.

INVESTMENT CONSULTING

PR SUPPORT

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PROJECT SELECTION CRITERIA

PRIORITY INDUSTRIES

2

• Construction materials • Consumer goods • Agriculture • Tourism • Chemical industry

• Mechanical engineering • Mining and smelting industry • Fuel industry • Power industry

* NCDC Board of Directors has the right to waive any of the above stated criteria for a project

TO SUBMIT AN APPLICATION TO THE OJSC NCDC FOR PROJECT REVIEW (PROJECTS MUST MEET ALL THE PROPOSED CRITERIA) THE INITIATORS WILL NEED TO PREPARE A SET OF DOCUMENTS, WHICH CAN BE Found ON THE SITE OF THE OJSC NCDC WWW.KRSKFO.RU

1

Total capital investment > RUR 500 million

Payback period no more than 7 years

Location NCFD

IRR not less than 12%

Initiator’s stake at least 30% of the total amount of investment required with at least 1/3 of this share in cash

NCDC’S INVESTMENT CRITERIA*

http://www.krskfo.ru/

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REAL ESTATE Total capital investment 4 776 mln. RUR NCDC equity contribution 4 776 mln. RUR New jobs created 126 (650) Annual taxes generated 260 mln. RUR

MANUFACTURING Total capital investment 5 143 mln. RUR NCDC equity contribution 252 mln. RUR New jobs created 608 (2400) Annual taxes generated 814 mln. RUR

AGRIBUSINESS Total capital investment 12 002 mln. RUR NCDC equity contribution 1 516 mln. RUR New jobs created 750 (1500) Annual taxes generated 625 mln. RUR

TOURISM AND RELATED SERVICES Total capital investment 5 970 mln. RUR NCDC equity contribution 94 mln. RUR New jobs created 800 (1600) Annual taxes generated 106 mln. RUR

Total capital investment 27 890 mln. RUR

NCDC equity contribution 6 638 mln. RUR

New jobs created 2 284 (direct) and 6 150 (in related

businesses)

Annual taxes generated 1 805 mln. RUR

Expected Weighted Average IRR

17%

NCDC’S BUSINESS LINES AND AREAS OF ACTIVITY

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DEVELOPMENT OF INTENSIVE CROP CULTIVATION IN STAVROPOL REGION (IRRICO)

DESCRIPTION

The project envisages the irrigated production of corn, soybeans

and potatoes on an area of 40, 000 ha, as well as non-irrigated

wheat, canola and sunflower production.

24,500 of the 40,000 ha are planned to be equipped with modern

center-pivot irrigation systems supplied by the existing irrigation

canals. The project also includes the construction of an elevator

and a potato storehouse.

The project is developed in partnership with VTB Capital and ADM

Capital. The partnership creates a precedent for international

investments in projects in the North Caucasus Federal District.

PROJECT’S PARAMETERS

Region: Stavropol Krai

Initiator: VTB Capital

Total capital investment: 4 673 mln RUR

NCDC equity share: 56 mln RUR

New jobs created: 227 (direct) and 2 000 (in related businesses).

Annual taxes generated: 700 mln RUR

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DEVELOPMENT OF INTENSIVE CROP CULTIVATION AND SOY PROCESSING IN STAVROPOL REGION (AVANGARD)

DESCRIPTION

The first stage of the project includes crop production with the

use of irrigation systems.

Soybeans and corn will be grown on a total area of 20,000 ha,

using intensive farming techniques. 16,000 ha of the crop

production area will be equipped with modern center-pivot

irrigation systems.

The second stage of the project envisages the construction of

elevators (loading capacity: 110,000 tons) and hangars for

storing machinery.



Initiator: AVG Capital Partners



New jobs created: 100 (direct) and 200 (in related businesses).


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DESCRIPTION

Development and operation of a multifunctional complex

including conference, exhibition and office facilities near the city

of Mineralniye Vody (Stavropol Region). The complex will be

located at the intersection of major highways connecting the

cities of the Caucasian Mineral Waters and the regions of the

North-Caucasian Federal District, in close proximity to the

Mineralniye Vody International Airport.

Total area of the complex is about 30 000 sq. m., including 10

000 sq. m. of covered exhibition space (multifunctional

transformable area) and 15 000 sq. m. of outdoor exhibition

space, as well as 36 000 sq. m. of open parking for 2 000 cars.



Initiator: NCDC


NCDC equity share: 3 066 mln RUR

New jobs created: 90 (direct) and 450 (in related businesses).


CONGRESS AND EXHIBITION COMPLEX IN THE CAUCASUS MINERAL WATERS

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ADVENTURE AND ECO-TOURISM IN NCFD. THE NORTH CAUCASUS MOUNTAIN CLUB.

DESCRIPTION

The main objective of North-Caucasus Mountain Club (NCMC)

is the development of all-season infrastructure and services for

adventure and eco-tourism.

It includes rent of vehicles and professional equipment;

development of routes in all NCFD regions; construction of

mountain shelters on Mount Elbrus; development of the

Internet portal providing information on extreme and eco-

tourism in the Caucasus to potential clients

(ПоСетиКавказ.рф/VisitCaucasus.ru). The project is aimed to

stimulate tourism and improve public image of the region.


Region: NCFD

Initiator: NCDC

Total capital investment: 210 mln RUR


New jobs created: 36 (direct) and 200 (in related businesses)


Documents

INVESTMENT OPPORTUNITIES FOR SWISS COMPANIES IN THE … · 2014-02-10 · 2 contents russian-swiss trade relations 3 russian-swiss investment cooperation 4 investment projects of