Washington D.C., April 3, 2002—The International
Finance Corporation, the private sector arm of the World Bank Group, will
invest Euro 20 million in Tigar Rubber Products Company A.D., a leading
tire and rubber goods producer in the Federal Republic of Yugoslavia (FRY)
and the Balkans. The investment, which is the largest attraction
of finance in a single private Yugoslav company in more than a decade,
reflects IFC’s continued support for the growth of FRY's private sector—a
key factor in the country's ongoing transition to a market economy.
Mr. Khosrow Zamani, Director of IFC’s Southern Europe and Central Asia
Department, said, “The IFC investment will provide much-needed long term
credit to a private manufacturing company and a key employer. It
is imperative that FRY’s manufacturing sector has sustained access to
credit and other financial services that are an essential element of growth.”
Mr. Zamani also expressed hope that Tigar could become a model for
future foreign investment in FRY’s manufacturing sector.
After a decade of war and international isolation, Tigar’s production
capacity and product competitiveness have been substantially challenged.
Despite this difficult environment, the company succeeded in continuing
its operations, maintaining its position as the second largest exporter
in FRY with 70 percent of its tire production exported mostly to Western
The IFC investment will support Tigar’s comprehensive two-year, 45 million
Euro expansion and restructuring plan, which includes a corporate modernization
program and consolidation of its existing strategic alliance with Michelin,
a leading multi-national tire company. The cooperation between Tigar
and Michelin dates from 1978. After 23 years of successful business
relations, in December 2001 Tigar and Michelin decided to establish a joint
company in 2002. IFC agreed with Tigar’s and Michelin’s proposal
to become the third partner. IFC has joined with Michelin and Tigar
to form a new company (TMH) that will be controlled 65 percent by Tigar,
25 percent by Michelin, and 10 percent by IFC. IFC’s investment is composed
of a 16 million Euro loan before the new company is incorporated this fall
and a Euro 4 million direct equity investment in TMH.
In addition, IFC is providing Tigar with an extensive technical assistance
program supported by the Swedish development agency SIDA and SEED, the
IFC-managed small and medium enterprise facility in the Balkans. The
program aims at developing a sustainable strategy for Tigar’s non-core
businesses and creating new employment opportunities in small enterprises
in the Pirot area.
In May 2001, the World Bank Executive Board confirmed FRY’s succession
to the membership of the former Socialist Federal republic of Yugoslavia.
Following its membership to the World Bank, FRY's membership in IFC
was confirmed. Since then, IFC has played an active role in FRY,
assessing various business sectors with potential. During 2001 the
IFC invested in two local banks that support small and medium-sized enterprises,
and Euro 7.7 Million in a Yugoslav fruit juice company.
“There are many very good investment opportunities in FRY,” said Roberto
Albisetti, IFC’s Chief of Mission in Yugoslavia, who has been posted in
Belgrade for the past six months exploring various investment opportunities.
“We are committed to supporting FRY’s private sector as it seeks
to rebuild from years of war and isolation.”
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC finances
private sector investments in the developing world, mobilizes capital in
the international financial markets, and provides technical assistance
and advice to governments and businesses. Since its founding in 1956, IFC
has committed more than $31 billion of its own funds and arranged $20 billion
in syndications for 2,636 companies in 140 developing countries. IFC's
committed portfolio at the end of FY01 was $14.3 billion.