The EBRD is providing Kr172mn (€5.5mn) of new capital for a 33% stake in Siemens Kolejov Vozidla (SKV), a Prague-based manufacturer of rail cars and trains owned by Siemens AG. The money will finance investments in technology and an upgrade of the plant to bring it to top industry standards and convert it into a regional competence centre. The bank’s investment is in line with its strategy to promote the private sector in central and eastern Europe and the Commonwealth of Independent States. Within three years a further capital increase of up to €4.5mn may be considered by the bank.
SKV is a special-purpose company set up by Siemens AG in 2002 through purchase of assets from the traditional Czech industry giant CKD DS. Siemens AG has now set up an ambitious programme of restructuring, upgrading and expanding the plant and is producing metro and commuter trains, passenger coaches, trams as well as refurbishing existing CKD DS products.
Alain Pilloux, EBRD business group director for central Europe, says the bank is proud to be involved in the industrial restructuring of a traditional Czech manufacturing company and to contribute to its ambitious expansion plans. Moreover, he hails the strong demonstration effect the restructuring of a company by a strategic investor such as Siemens will have on other enterprises in similar situations. The EBRD was set up to strengthen private sector investment in the region, and this project is a good example of that, adds Pilloux.
Hans-Dieter Bott, vice-president of Siemens Transportation Systems and chairman of the Advisory Council of SKV, says that this type of co-operation represents a milestone for Siemens and the EBRD and will serve as a solid basis for further opportunities for investment and project financing in central and eastern Europe.
The EBRD mobilises significant foreign direct investment in central and eastern Europe beyond its own financing. For every euro invested, the bank generally attracts roughly €3 from other investors. The EBRD mainly invests in private enterprises, usually with commercial partners. It provides project financing for banks, industries and business, both new ventures and investments in existing companies. In the Czech Republic the EBRD has financed 37 projects worth €900mn as of end 2002.
Established in 1989, the Transportation Systems Group (TS) of Siemens AG has become one of the leading international suppliers to the railway industry. With its headquarters in Erlangen, Germany, TS has additional offices and manufacturing facilities in Germany, Austria, France, the Czech Republic and the US. As of September 30, 2002, TS generated sales of €4.4bn with a global staff of around 17,100.