Kaufland wants 150m euros from EBRD for expansion

The European Bank for Reconstruction and Development (EBRD) is mulling a 150 million-euro loan to German retailer Kaufland; the money would be meant to fund the group’s expansion in Romania and Bulgaria, according to information posted on the EBRD website.

This will be the second loan granted by the financial institution to the German retailer for the expansion of its network across Romania – in 2007, the EBRD approved a 100 million-euro credit for Kaufland, the only retailer that ran financing programmes together with the EBRD in Romania. “Modern retail will keep growing, despite the economic crisis. The growth pace will slightly vary, depending on the particular format promoted by every retailer. However, the retail-food market is still posting growth and, consequently, I expect to see more players investing in expansion,” said Codrut Pascu, managing partner for Romania with Roland Berger. Kaufland, which owns a 37-store network and employs more than 6,000 people in Romania, is now looking to go to the small and medium towns. The company posted on its website an announcement stating its plans to buy “land of at least 8,000 square metres, with a good central or peripheral location, in towns with at least 40,000 inhabitants.” Representatives for the EBRD and Kaufland Romania would not comment on the information by the time the newspaper was ready for print. Total costs of Kaufland’s expansion process in Romania and Bulgaria are put at 300 million euros, but the sum allocated for Romania has not been mentioned. Kaufland spends between 8 and 10 million dollars in building a store, which means that under this programme the German group will be able to open at least another 30 stores. Thus, on the dynamic hypermarket segment, where the battle is especially fierce among Carrefour, Real and Kaufland, the German retailer may speed up expansion in order to go to ‘virgin’ towns. Carrefour, the player with the biggest turnover, also noted in a 2008 report that it was planning to reach 40 hypermarkets in Romania by 2012, as compared to the current 23, following an investment programme worth 450 million euros. Kaufland Romania currently operates 37 units with a discount-driven policy and logged 642 million euros in turnover in 2007, triple compared to the previous year. The retailer did not release its financial results for 2008, but, according to ZF estimates, the group’s sales were close to one billion euros. The EBRD has also been very active locally since the beginning of the year. The financial institution has recently acquired 50% in Renault Technologie Roumanie, the Titu-based Renault centre, by contributing 44 million euros to the company’s capital increase and endorsed a 200 million-euro loan to Petrom – the funds will be used to build an electrical plant in Brazi, a project worth 500 million euros.