KUKE insures the investment of the Polish clothing brand in Belarus
The Polish clothing brand, CDRL S.A. (Coccodrillo), signed a PLN 10m loan agreement with Bank Gospodarstwa Krajowego (BGK). The funds so obtained will be used for partial refinancing of the purchase of shares in the Belarusian group which manages supermarkets selling articles for children. This is the first use of a BGK loan for acquisitions outside the EU. The financing is combined with a KUKE’s insurance which covers the investment against political risk. This type of package is a completely new solution on the Polish market.
BGK granted a long-term loan to CDRL S.A., a Polish company which is a distributor of children’s clothing sold under the Coccodrillo brand. The loan amount is PLN 10m. The purpose of the loan is to refinance the purchase of shares in the Belarusian LLC DPM, a company which manages supermarkets selling articles for children, trading as Buslik, which was acquired by CDRL S.A. at the beginning of 2019. This is the first acquisition supported by BGK on the market outside the European Union.
Through various types of financial instruments, BGK supports projects of domestic companies in 66 countries on 6 continents. So far we have assisted in over a dozen capital investments of Polish companies abroad, which included acquisitions in the United Kingdom, France and Hungary. The acquisition carried out by CDRL S.A. is the first transaction of this type supported by BGK outside the EU market. A condition for paying out part of the loan is CDRL S.A. obtaining a KUKE insurance that covers the investment against political risk. The combination of these two products is a completely new solution which provides support to Polish companies that carry out direct investments outside of Poland, says Wojciech Hann, a Member of the Management Board of BGK.
CDRL S.A. is active on 4 continents, including in countries such as the Czech Republic, Romania, Bulgaria or the Baltic states, and outside the European Union - in Belarus, Russia, Kazakhstan, Sri Lanka and Saudi Arabia. The funds raised by the company will allow it to develop its operations on the Belarusian market. The acquisition involves the purchase of shares of the Buslik supermarket chain, which comprises 46 retail outlets, including 17 in Minsk. The Belarusian chain offers products for children under 12, including children’s clothing, footwear, food, accessories for infants, cosmetics, toys and furniture.
We are the leading distributor of children’s clothing and accessories in the Central and Eastern Europe. We strengthen the Coccodrillo brand by increasing sales in stores in Poland and abroad. We are convinced that the obtained financing and entering the Belarusian market will allow us to better pursue our mission and meet the parents’ expectations and provide them with the products that their children need, said Marek Dworczak, President of CDRL S.A.
The funds raised through the acquisition loan will support an even more effective development of the Polish company. The support provided by BGK and KUKE additionally protects the investment against political risk.
At present, KUKE is finalizing the insurance procedure for another investment of the Polish company on the Belarusian market. If a positive decision is made, the Polish investor will receive insurance cover against the risk of political events, which include, among others, nationalization or payment moratorium announced by the government, but the insurance also covers events of the force majeure, such as wars, riots, mass strikes, as well as floods or fires. If any of these events occurs, up to 90% of the resulting loss related to this investment will be covered for the Polish investor. Once again, the Polish company receives comprehensive support from BGK and KUKE in safe financing of foreign expansion. KUKE is willing to insure the activities of Polish entities in most countries of the world, both on developed markets and those which are considered more risky, says Janusz Władyczak, CEO of KUKE.
The combination of a loan for foreign acquisition with investment insurance in KUKE may also work for financing of projects of Polish enterprises on other foreign markets.