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Uzbek brick maker ensures future growth with EBRD investment
The first major brick manufacturer in Uzbekistan, Stroyservice, will upgrade and expand its production of basic building materials with the support of a US$ 12 million (ECU 9.2 million) equity investment by the European Bank for Reconstruction and Development (EBRD).
Ron Freeman, EBRD Vice President, said: "Renewed demand for residential property in Uzbekistan has created new opportunities for the domestic building industry. Good quality materials, in sufficient supply, are crucial. With the EBRD's investment, Stroyservice will be able to satisfy the changing demands of its clients and create 859 local jobs. More fundamentally, the emerging small-scale contractors will be able to obtain high quality materials locally, in open market conditions, for the first time."
Mr Marwan Kalo, the Chairman of Kalo Holdings Corporation, said: "As a leading foreign investor in Uzbekistan, we have made a long-term commitment to participate actively on a broad spectrum in the economic development of the country. We are pleased that the EBRD and the Central Asian-American Enterprise Fund have decided to associate themselves with us in this building materials project, which should assist significantly the major construction drive under way in Uzbekistan."
This is the EBRD's first transaction in Uzbekistan involving a manufacturing company targeting the domestic market. Stroyservice, a private joint-venture enterprise, was established in 1994 by Kalo Holdings Corporation (a British-led company) and Tashjilinveststroy (the largest construction conglomerate in Uzbekistan, based in Tashkent). Stroyservice is currently 60 per cent owned by Kalo and 40 per cent owned by Tashjilinveststroy. Stroyservice manufactures three basic building materials: high-quality standard clay bricks to be used primarily as facing bricks, precast concrete building blocks and pressed concrete roof tiles, the latter being produced for the first time in Uzbekistan.
Proceeds of the EBRD's investment will be used to cover part of the upgrading costs of the existing pilot brick production line and for the installation of two further brick production lines, creating a manufacturing capacity of 100 million pieces per year.
The Central Asian-American Enterprise Fund, a privately managed US Government backed investment fund with offices in all of the Central Asian republics, is also an investor in Stroyservice. The Fund's President, Richard S. Bernstrom, who is based in the region, said: "We are delighted to join forces with the EBRD, Kalo Holdings Corporation and Tashjilinveststroy in realising this important and attractive project. We believe it is very important for the Uzbek economy and will materially advance the privatisation process in the country, in addition to creating much-needed job opportunities. The Fund is keen to cooperate with the EBRD on other projects in the region because of the synergy of the two organisations".
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