Pilkington plc and Emerging Markets Partnership (EMP), principal adviser to the AIG Emerging Europe Infrastructure Fund, have formed a 50:50 joint venture to construct and operate a float glass plant in the Moscow region of Russia. The investment will be financed by £21 million of equity each from Pilkington and EMP, and from project loans. Pilkington's equity investment will be made over the next two years.
The plant, which will have a sales capacity of approximately 240,000 tonnes per annum, will be built and operated by Pilkington. It will be situated in the Ramenskoye district of the Moscow Oblast and is planned to come on stream in 2005.
Pilkington Group Chief Executive, Stuart Chambers, said "This plant represents our first step in establishing a growth opportunity for Pilkington in Russia, an important expanding market for glass. There is increasing demand for high quality glass in Russia, particularly in and around cities such as Moscow and St. Petersburg, where triple glazing is the norm and the increased use of modern insulated glazing unit lines require top quality glass standards".
EMP is a global private equity firm focusing on emerging markets and a world leader in private infrastructure investment. EMP currently advises private equity funds in Asia, Latin America, Africa, the Middle East and Central and Eastern Europe. Funding for this transaction, which was arranged by EMP's European affiliate, will come from the AIG Emerging Europe Infrastructure Fund L.P. ("EEIF").
EEIF, is a private equity fund sponsored by the American International Group, Inc. (AIG), ABN AMRO Bank, Edison Capital and IFC. The Fund invests in infrastructure projects and infrastructure related industries in Central and Eastern Europe and already has investments in Poland, Hungary, the Czech Republic, Bulgaria, Slovakia, Slovenia and Estonia.
The total project cost (including working capital) of £112m will be financed by Equity contributions from Pilkington and EMP totalling £42 million, and by debt finance of £70 million, in the form of long-term project loans and local borrowings for working capital requirements.
Pilkington has been supplying the Russian market since 1996 and operates a sales office in Moscow and a warehouse in St Petersburg.
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