Business Review Issue 13/2012 April 16 - 22

News: Princess Marina Sturdza has been appointed honorary president of the board at the local Vodafone Foundation, which has EUR 2 million of social projects underway this year »page 3`

ROMANIA’S PREMIERE BUSINESS WEEKLY

ETHNIC FOOD STORES

April 16 - 22, 2012 / VOLUME 16, NUMBER 13

SHOPPERS AND ENTREPRENEURS WITH A TASTE FOR THE EXOTIC ARE PROPELLING THE GROWTH OF DELIS AND SPECIALIST STORES SELLING INTERNATIONAL CULINARY TREATS »PAGE 12

ACCESS TO FINANCE Private equity, bank loan or European funds? BR looks at the pros and cons of the finance options available to local companies »pages 6-11

NEWS

NEWS

NEWS

FILM

Copper-bottomed opportunity?

Subway journey

Mall systems go

A fishy tale

French retailer Auchan is putting EUR 60 million into a Brasov shopping mall, set to open at the end of next year » page 5

Salmon Fishing in the Yemen swims against the tide with a quirky blend of wit, hope and romance that had our movie critic hooked » page 14

Fast food firm Subway Canadian Roman Cop- opened its first local per remains interested franchise last week in in the privatization of Bucharest, and plans Cupru Min, despite to open 40 more negotiation setbacks around the country » page 4 » page 5

www.business-review.ro Business Review | April 16 - 22, 2012

NEWS 3

NEWS in brief IT&C Survey maps software salaries in western Romania

RETAIL & FMCG Patriciu fails to sell Mic.ro and MiniMax, ponders bankruptcy Mic.ro and MiniMax, the two retail chains owned by Romanian businessman Dinu Patriciu which entered insolvency earlier this year, may now seek bankruptcy after attempts to sell them failed, RVA Insolvency Specialists, the companies’ judicial administrator, told Mediafax newswire.

Otilia Milu, co-manager of RVA Insolvency, told Mediafax that selling the two companies was the only option available as they were out of cash and the shareholders were not willing to invest any more money.

Consumer credit market to grow by 5 percent this year, says Cetelem GM The credit consumer market in Romania rose 10 percent to EUR 469 million last year, representing the volume of new issued credit, according to data from the Financial Companies Association – ALB Romania. Gilles Zeitoun, general manager of Cetelem IFN, the credit consumer firm that is part of BNP Paribas Personal Finance, predicts the credit consumer market will grow by 5 percent this year.

“This growth is impacted by the new credit regulation imposed by the National Bank of Romania, especially by the lowering of payment terms on consumer credit to five years,” Zeitoun told BR. Cetelem is the leading credit consumer firm in Romania, and reported a 24 percent increase in credit volume last year. For this year, the company is aiming for further growth of 15-20 percent, according to Zeitoun.

Transavia opens poultry production facility in Cristuru Secuiesc Romanian poultry producer Transavia

Photo: Laurentiu Obae

The average gross salary of a software architect with at least five years’ experience in software development and good programming skills is EUR 2,608 per month, according to the survey AIMS Salary Map IT, which reports on software development companies in the Banat and Transylvania regions of Romania. Thirty-two companies in Timisoara, Cluj, Sibiu and Brasov, with a total number of 4,500 employees, participated in the research.

A software architect’s pay is 30 percent higher than that of a team leader, who earns on average EUR 1,862 gross. A financial manager makes EUR 2,552 and a human resources manager EUR 1,847. A financial specialist is paid EUR 1,040 and a HR generalist EUR 890 (all figures gross). Salaries in R&D continue to be relatively substantial, with the average pay EUR 462 per month, approximately 2.5 times the average at national level.

Easter holiday, 60 percent of whom will be Romanians, according to novinite.com. Greek, Serbian and Macedonian visitors are also expected in large numbers.

According to the Union of Hotel Owners from Sunny Beach, Romanians will be the largest contingent of foreign tourists in the Black Sea resort this Easter, followed by groups from Serbia and Macedonia. While Romanians choose seaside resorts, Greek tourists prefer spa towns like Velingrad and Sandanski.

Hotel owners from the northern Black Sea resort of Golden Sands say they have seen an increase in bookings made by Romanian holidaymakers, over the last few days, adding that the hike comes from the lower prices and better quality of Bulgarian resorts compared to Romanian ones, according to novinite.com.

EVENT of the week Vodafone Foundation appoints new administration board

T

he Vodafone Foundation announced our citizens to solve their material and solast week a new administration board cial problems with dignity.” which now includes public figures Princess Sturdza told BR how she had from outside the company. Princess Marina been approached by the foundation. “The Sturdza was appointed honorary president, members of the board apparently heard while Martin Harris, the UK ambassador to me speak at events linked to charities Romania, and government expert Conand the new CEO of the company Inaki delina Kilikidis have become members. Berroeta took an interest and had the The board also includes Vodafone repreidea that the board be opened up to broadsentatives Florina Tanase, senior director er opinions and perhaps to people who regulatory, legal and corporate affairs; had experience of foundation work in Andres Vicente, CCO, enterprise business many countries. I didn’t know that they unit; Lidia Solomon, director corporate had phoned me, I saw these messages communications; and Elena Serban, difrom a number I didn’t know and when I rector of the Vodafone Foundation. finally called, I discovered that it was in The local Vodafone Foundation was fact the Vodafone Foundation and they founded in 1998 and has so far invested wanted to invite me to become chairEUR 13 million in social projects, having man for the next two years. Usually in orlaunched more than 600 programs in ganizations if someone performs well, this term is extended.” partnership with 400 NGOs in areas such The Vodafone Foundation is present in as healthcare, education, the prevention of all the countries where the mobile operfamily abandonment, young people with ator is active. However, “the foundation disabilities and the elderly. The total valdecides locally which projects are relevant ue of the projects implemented by the for the needs of the country. So, the acfoundation in 2012 is in excess of EUR 2 miltivities of the foundation in Tanzania, or lion.

Germany or Romania are very different,” Princess Sturdza said she was familiar Inaki Berroeta, Vodafone CEO, told BR. with the foundation’s projects and had agreed to become honorary president “The foundation is funded by Vodafone Romania and the Vodafone group. We look since “it represents exactly what a publicprivate partnership in civil society means, for the projects that are more important but funding decisions are also based on the and a model of how a civil society can act capability of the company to generate to help our most vulnerable citizens.” She profit. When we do well, we allocate more added, “Romania does not need charity but money.” ∫ a helping hand so that we can encourage has invested in opening a new production facility in Cristuru Secuiesc, Harghita county. The farm will produce 5,500 tons of poultry per year and employ 30 people. The producer has also had to invest in increasing the production capacity of its incubation facility, its fodder factory in Sintimbru and its abattoir in Oiejdea.

Transavia currently produces over 50,000 tons of poultry annually. It employs more than 1,400 people and owns 15 chicken farms, two reproduction farms and two incubation facilities, a com-

bined fodder factory, two abattoirs, a poultry-processing factory and two cereal farms. In 2010 the company’s sales amounted to RON 423.15 million (approximately EUR 100 million).

TOURISM Romanians make up bulk of tourists for Bulgaria this Easter Bulgarian resorts will welcome some 10,000 to 11,000 foreign tourists over the

BUSINESS AGENDA April 19 13:30 Venture Connect organizes the second edition of the Venture Mentoring program at the headquarters of the PostPrivatization Foundation. By invitation only.

April 23 15:00 The CEO Clubs International – Romania organizes the second forum on “Creating a Culture for Agile Leaders” at Athenee Palace Hilton. Bill Joiner, author and thought leader on leadership agility, will be guest speaker.

By invitation only.

April 24 09:00 ICAP Romania and CYCLE European organize a conference on credit risk at Radisson Blu Hotel. By invitation only.

April 24 – 27 Romtherm, the international exhibition for heating, cooling and air conditioning equipment, will take place at Romexpo Exhibition Center.

April 25 ∫EVENT BR organizes the third edition of Focus on Renewable Energy at Howard Johnson Grand Plaza Hotel. By invitation only. Find out more at http://businessreview.ro/br-events/ April 25 – 29 Uticam, the international fair for construction trucks and equipment, will take place in the Baneasa Commercial Area.

May 10 ∫EVENT BR organizes the third edition of the British Investors Forum. By invitation only. Find out more at http://businessreview.ro/br-events/

www.business-review.ro Business Review | April 16 - 22, 2012

4 NEWS MINING

Roman Copper still in for Cupru Min despite negotiation setback

Courtesy of Cupru Min

Mine of information: conflicting statements have been made about Cupru Min

R

oman Copper Corp, a company controlled by Toronto-based investment boutique BayFront Capital Partners, has announced that it intends to continue with the privatization of stateowned copper mining firm Cupru Min, despite a series of conflicting statements over the state of proceedings.

The company won the open-cry auction of March 26, bidding EUR 200.7 million for Cupru Min, from a starting price of EUR 54.3 million. However, ten days later the Romanian authorities announced that privatization negotiations with the Canadian firm had broken down and a new auction would be organized.

The Ministry of Economy said negotiations had “ended permanently,” as the Canadian company had not accepted clauses in the privatization contract on environmental guarantees, payment terms and transparency.

“The state did not want to give up three clauses – the publication of the contract, the setting up of a collateral deposit of EUR 32.2 million in guarantees for environmental investments and the full payment of the outstanding sum after the main permit and environmental permits were issued, which are suspensive clauses in the contract,” said Lucian Bode, minister of economy, quoted by Agerpres newswire.

Shortly after this announcement Roman Copper issued a press release saying that it would accept all the clauses imposed by the government, adding that the auction for Cupru Min was “the most transparent in the history of the privatization program.”

Early last week Roman Copper executives requested meetings with Prime Minister Mihai Razvan Ungureanu and Bode, in order to clarify misunderstandings that arose from the negotiations. Representatives of the Canadian firm said Bode had not played a direct role in the talks. Moreover, Roman Copper appointed top management figures to oversee the Cupru Min acquisition.

Dutch Dundee Holding and Australian Oz Minerals were also bidders for Cupru Min, which owns the Rosia Poieni mine.

The site has a copper deposit of around 800

million tons with a 0.3 percent copper concentration.

Sorin Gaman, director of the mineral resource department within the Ministry of Economy, recently told a conference that the copper deposit in Rosia Poieni was worth between EUR 13 and 14 billion, including extraction and processing costs.

“In establishing the current deposit value an investor will calculate the updated cash-flow (net costs), weighted with uncertainties regarding the future prices of metals in the deposit,” said Alexandru Lupea, partner, audit services, leader of the service group for energy industry, mining and utilities at PwC Romania.

Although the estimated value of the deposit is significant, mining giants such as BHP Billiton and Rio Tinto did not show interest in the Romanian entity. “The absence of these companies from the tender could indicate that the deposit would not be profitable for them, that the geological data were uncertain, or that they simply have other investment priorities,” said Lupea.

President Traian Basescu said last week during the appointment of Attila Korodi as environment minister that new mining projects would create jobs and help the environment. President Basescu made reference to controversial mining projects such as the planned gold exploitation in Rosia Montana, copper mining in Rosia Poieni and opening the way for shale gas drilling in some parts of Romania.

“It is clear that Romania doesn’t have the billion of euros necessary to import technologies for exploiting these resources – gold, copper and shale gas – under conditions that protect the environment. This is why partnering with foreign companies seems to be the only solution,” said the president. He has urged the government to set up a bill that changes the level of royalties for all resources in the next two weeks. Lupea of PwC says the state will collect money from the auction price and the royalties taken from the company that will exploit the deposits. “The higher the royalty level is set, the less money companies will bid,” warned Lupea. ∫ Ovidiu Posirca

www.business-review.ro Business Review | April 16 - 22, 2012

NEWS 5 PROPERTY

RETAIL

Auchan invests EUR 60 million in Brasov shopping mall

Subway opens first local outlet, plans 40 more

Photo: Laurentiu Obae

Cristian Stefanescu (left), franchise holder, and Rumen Radev, development agent for Subway in Romania

T

he first Romanian Subway franchise was opened last week in Bucharest on Nicolae Titulescu Blvd, close to Victoriei Square. The store, which was inaugurated in the presence of the US ambassador Mark Gitenstein, is owned by local entrepreneur Cristian Stefanescu.

Over the next four years, the US-based fastfood chain plans to set up about 40 new locations on the local market, in Bucharest and countrywide.

Subway has already signed franchise agreements with another 20 local entrepreneurs. “They have to pass the training, find a location, which must be approved by Subway, and sign the contract,” Rumen Radev, the development agent for Subway in Romania, told BR. Stefanescu said he had invested between EUR 100,000 and EUR 200,000 in setting up the restaurant, without disclosing the exact figure. The investment came from personal funds as well as a bank loan. Subway restaurants require a minimum initial investment of EUR 100,000.

The businessman applied for the franchise last summer. After submitting a business plan for the restaurant he went for an interview in Bulgaria (e.n. where the Subway development agent for Romania and Bulgaria is located). Before signing the contract, he also underwent a two-week turning program in Milford, Connecticut.

The franchise tax costs EUR 7,500 and royalties amount to 8 percent of weekly gross sales. Another 4.5 percent goes on advertising. The 32-year-old entrepreneur has previously worked for Piraeus Bank as corporate team leader and also runs an online toy store. He wants to open further Subway locations in Bucharest but a lot depends on the results of this first outlet.

So far, two more Subways have been confirmed in Iasi and Cluj. Local prices are RON 8 to RON 9 (for a 15 cm sandwich). For another RON 5 diners can purchase the 30 cm version of the same sandwich. The store also sells 46, 92 and 184 cm sandwiches, salads and desserts. ∫ Simona Bazavan

RATINGS

Fitch praises Romania’s performance, calls for government caution pre-election

R

omania has performed well against an environment of broader sovereign downgrades, causing its risk rating to be lifted to investment grade last July by Fitch ratings agency, according to Richard Hunter, managing director for EMEA & Asia Pacific at Fitch.

Hunter will be guest speaker at the third Credit Risk Management Conference organized by ICAP and Cycle European, both members of ICAP Romania, the credit risk firm, on April 24.

Fitch upgraded Romania’s rating to a BBB- last July, pronouncing the country a favorable destination for investment.

“This is a critical threshold for many investors, and represents hard-won progress on the budget deficit and fiscal credibility, even as threats from inflation and the banking sector remain live,” said Hunter.

In Central and Eastern Europe, country ratings range from high – the Czech Republic has an A+ rating – to low – Ser-

bia is ranked at BB-, according to the Fitch representative. Broadly, the Euro zone crisis has already driven the revision of France’s top notch AAA rating to negative, although Germany’s AAA rating remains solid under the current conditions.

The finance sector remains the most exposed field to risk in Romania, mainly due to an increase in bad loans.

“Finance is probably our biggest concern, given the track record of non-performing loan increases, and the general tension experienced by financial sectors emerging from the stresses of the conversion to a market economy,” said Hunter.

He added that the government’s approach to the November elections will be critical in protecting Romania from the economic turbulence that hit peripheral members of the Euro zone, such as Ireland, Portugal and Italy. ∫ Ovidiu Posirca

Courtesy of Auchan

F

rench retailer Auchan, which runs nine hypermarkets in Romania, will open a mall in Brasov at the end of 2013. The company will invest EUR 55 to 60 million in developing the first phase of the Coresi Shopping Center project, which features an Auchan hypermarket (16,000 sqm), a shopping mall (25,000 sqm of gross leasable area) and a car park with 3,000 places, according to Mediafax newswire.

The mall will be located on the site of the former Tractorul industrial platform.

Construction will begin this year and the finished project will cover 24 hectares of land out of the total 100 hectares that Auchan bought.

In 2012 the retailer will open a new hypermarket and its first Auchan City shopping gallery in Bucharest. By 2015 it wants to have 15 hypermarkets locally and plans to have invested EUR 150 million.

Earlier this year Auchan officially announced that it was planning to invest in developing two shopping galleries in Romania between 2012 and 2013 under the Auchan City concept.

The first mall will be located in the Giulesti neighborhood on a plot of land purchased from the Grantmetal factory and could be opened by the end of December following a EUR 15 million investment, according to media reports. The project will include a 5,000-sqm Auchan City hypermarket and a 2,000-sqm shopping gallery.

The new mall will open in 2013 The second project will be built in the Ghencea neighborhood on the grounds of the Tricodava industrial platform and will feature an Auchan City hypermarket with an 11,000-sqm surface area and an additional 100 stores.

The development of Auchan’s real estate projects will be handled by Immochan, Auchan Group’s property management division, a subsidiary of which was recently created in Romania too. Immochan manages 320 commercial centers in 12 countries.

The Auchan Group is controlled by the Mulliez family, one of the wealthiest in France. Gerard Mulliez opened the first store in Roubaix (northern France) in 1961.

The Mulliez family has interests in a large number of companies including Decathlon, Kiabi and Pimkie. The company counted 1,375 hypermarkets and supermarkets in 12 countries at the end of 2011 and employs 262,000 people. ∫ Simona Bazavan

www.business-review.ro Business Review | April 16 - 22, 2012

6 ACCESS TO FINANCE

The state of Romania’s financial resources Companies need financial resources to develop on the medium and long term and to consolidate their market position in order to come out of the recession in a better position than their competitors. Specialists told Business Review about the major trends, difficulties and challenges on the local market and outlined the current state of private equity funds, bank loans and European funds. ∫ ANDA SEBESI

mass approach in analyzing companies, while the small and medium ones prefer the customized approach to their customers and are therefore more flexible,” say OTP representatives.

Private equity funds faced tough period…

Private equity funds and venture capitalists made few investments in Romania in 2011. According to Cristian Nacu, partner at Enterprise Investors (EI), the total value of investments was less then EUR 100 million last year. “The reason is that many of the companies that could have been attractive targets for potential acquisitions had modest evolutions between 2009 and 2011 because of the economic crisis. The majority of them posted a decrease in turnover and/or profitability and that diminished their attractiveness,” says Nacu. He adds that entrepreneurs who run businesses that prospered last year expected to obtain very high prices for their companies.

For example, Oresa acquired RTC Proffice, the leader on the office supply market. The transaction was completed in November when Oresa took over all the shares in the company and injected several million euros to recapitalize it, reduce bank debt and fund the growth of working capital and new marketing initiatives.

“We bought the company from the group founded by the Romanian entrepreneur Radu Octavian. It was a complex negotiation process involving eight banks and several Radu Holding group companies with which Proffice will continue to have commercial relations either as suppliers or as clients,” says Cornel Marian, managing director at Oresa Ventures Romania.

Oresa also made an add-on acquisition in Somaco group, its building materials company, buying a division from G&D Prefabricate. According to Marian, Advent, GED and the PE fund that is a shareholder in Medlife also made some add-on acquisition to consolidate the positions of the companies in which they had invested previously.

As for the future, Nacu says that this year is not likely to be significantly different from 2011, considering Romania’s economic conditions. “I think that there are enough dangers imperiling the stability of many markets. The majority of these threats are not necessarily related to Romania but they can certainly affect it.

The Romanian economy depends very much on the other European economies,” says Nacu. Elsewhere, Marian of Oresa says that the most active funds will probably remain those with a well established presence in the market and a team with good experience in Romania. “Oresa has been here for over 15 years and I think that Advent and EI are also in a good position.

There are another two-three teams that are looking for investments, including some newcomers who are active in Poland and in the region, and I hope they will start to make investments as well,” says Marian.

Turning to the way the current economic crisis has influenced the activity of private equity firms, the Oresa representative says that the first thing the fund he

Low absorption of EU funds still problematic

Show me the money! Financing is vital for firms during these tough economic times

runs did in the last quarter of 2008 and 2009 was to focus on its existing portfolio of companies – Fabryo, Somaco, Kiwi Finance and Trinity – and ensure that it was ready to provide the support needed during the economic recession, in terms of capital but also management and strategic support. “Then we started to see how we could use the opportunities created by crisis – we invested more in Fabryo and expanded its presence in retail, product range and also brand support. In 2010 we invested two-three times more in sales and marketing than Fabryo’s main competitors. At Somaco we put a new production line into our factory in Roman, which makes water system prefabricate concrete elements. We also bought G&D Teius and expanded in Transylvania. We provided the necessary help to Kiwi Finance, not only to survive in the tough financial services sector but to improve its position. It is now expanding again in the country by developing its franchise network,” says Marian. Oresa continues to be interested in building materials, business services and financial services.

…while corporate finance posted positive performance 2011 brought evolution on the corporate finance segment, propelled mainly by the increasing trust of entrepreneurs following the positive results of the local economy. In such a context, the corporate loans dynamic was influenced especially by exports and industry. “Although credits in EUR were cheaper, the balance of loans granted to private companies increased mainly because of financing in RON. As for OTP Bank Romania, the balance of credits to medium and large companies posted moderate growth, with the processing and extraction industries and agriculture being the targeted activ-

ities for financing,” say representatives of OTP Bank.

Elsewhere, ING Bank Romania officials comment that the first eight months of 2011 were characterized by an increase in both the demand and supply of credits and a partial recovery of optimism and companies’ investment or development plans. “This trend first slowed down and then stopped, especially in the last quarter of 2011, due to the problems, discussions and uncertainty affecting the Euro zone. But now it is about to be reversed,” they predict. They add that judging by the signals they have from the market so far, demand for loans will slowly increase this year, albeit less so than in 2011, while the supply will decrease.

“The major trend in 2012 will be an increase in credit granted in RON to the detriment of EUR loans, as a result of the cut in financing from mother banks.

Meanwhile, the cost of RON loans will depend significantly on the sums that lenders manage to attract from the market,” say representatives of OTP. “Corporate lending will continue to post an increase and banks will focus on lending to manufacturing companies and those that implement projects involving European co-financing. Also the weight of agricultural loans will increase. Because of the higher potential for profitability, lenders will target the development of exporters and importers, and generally show interest in the financing of international trade.”

While until 2008 bank loans were granted liberally, and in 2009 almost seized up entirely, specialists describe 2011 and 2012 as years when lenders have wanted to approve loans, depending on the quality of their customers. “Banks are taking two main approaches to corporate financing. The large ones are trying a

One of the most significant problems that Romania faces at present is its low absorption of structural funds. But according to Florin Banateanu, director advisory at KPMG, this had been to some extent expected since the start of the program, because of the lack of experience both of the authorities responsible for the implementation of the operational programs and of the potential beneficiaries in planning the investments, understanding the demands of financing institutions and implementing the project according to the financing contract. “As an illustration, those programs that were a repeat of pre-accession programs to which Romania had access until January 1, 2007 – the Program for Rural Development financed through the European Fund for Agriculture and Rural Development and the Regional Operational Program – posted a higher absorption rate than the average absorption rate of European funds in Romania,” says Banateanu. According to him, these two programs benefited from the coordination of the same authorities as the corresponding pre-accession programs SAPARD and PHARE-CES did, and addressed the same type of beneficiaries.

In the KPMG director’s opinion, the rate of absorption of EU funds can be increased through the very careful monitoring of the implementation of projects, assistance offered to the project beneficiaries and the adoption of measures to clarify the program documentation. But he warns that changing the administrative structure of financed programs from EU funds at present would lead to significant confusion and delays. So what can the local authorities do to manage European funds better? Real involvement in helping the beneficiaries to implement the projects developed through European funds could be a major step. “In addition they have to continue to analyze the absorption on each priority axis in order to identify over time the possibilities for relocating funds, according to the demand, within each program,” says Banateanu.

Banateanu says the risk of European funds being withdrawn can be reduced by making efficient the processes of evaluation, checking and monitoring along with the inspection of implemented projects and assisting the beneficiaries in implementing them. “It is time for authorities to decide to become a help and not a hindrance in implementing projects, but without making compromises in terms of keeping the applicable regulations,” says Banateanu.

anda.sebesi@business-review.ro

www.business-review.ro Business Review | April 16 - 22, 2012

ACCESS TO FINANCE 7

European funds generate absorption anxiety Blighted by a significantly low absorption rate of European funds, Romania needs to make great efforts to increase this indicator and improve the system by which beneficiaries can access EU financing, experts say, if the vast sums available are not to remain unused. ∫ ANDA SEBESI

more and more complicated,” says Meirosu.

She adds that financing guides need Systemic weaknesses to be simplified so the individuals they One of the most pressing problems that are meant for can understand them. “BeRomania is facing at present is a lack of efsides, procedures need to be the same, ficiency in absorbing and accessing Euboth at central and local level,” she says. ropean funds.

According to the latest data available, Asked what financial contribution is required for potential beneficiaries of funds the absorption rate of EU funds was just for rural development, Meirosu says that 5.55 percent at the end of 2011 and 6.3 persome categories – semi-subsistence farmcent in February 2012. These results are ers and young farmers – are exempt, far from satisfactory, as Romania has those seeking funds for agricultural exbeen allocated over EUR 19.2 billion of Euploitation must contribute between 25 ropean funds for 2007-2013. So what is and 60 percent, while microenterprises the problem? must put up 30 percent.

“Difficulties in managing European In related developments, the Minfunds are just a result of general inabiliistry of European Affairs received an ty, but on a larger scale. A healthy and official letter from European Commission strong system wouldn’t have had any last month, announcing the suspension problem in implementing financing that of the Operational Program for the Dewas established on a coherent economvelopment of Human Resources (POSic base. Until the system matures, projects DRU). The measure came in response to won’t be implemented successfully,” says management failings. “With POS-DRU, Ionut Ilie, founder of mobileOutlook, a there should have been an implementacompany specialized in consultancy services for accessing non-repayable funds, tion stage for strategic programs for regions, to generate implementable reproject management and research and development for Smartphone/mobiles. sults through necessary small and local projects,” says Ilie.

He adds that while the accessing sysAccording to him, local difficulties in tem lacks an integrated vision, coherent accessing European funds stem from approach and specific targets, there will projects that are not based on real idenbe no efficiency. “The difficulty in actified needs, a lack of documentation cessing funds is also due to some unmoand figures in the project budgets , and tivated beneficiaries,” says Ilie. the co-finance required of beneficiaries.

“Furthermore, the fluctuation of exchange rates can make a project unfeasible from the beginning,” says Ilie.

1.8 %

increase in Romania’s annual GDP, if the country secured all the available EU structural and cohesion funds

According to the businessman, one permanent problem is the lack of a fixed annual schedule for launches, which would allow investors to prepare for financing programs.

“The long selection and evaluation periods for projects, meaning that it can take a year from presentation to approval, is another drawback,” says the mobileOutlook founder.

He adds that the gaps between the intermediate reports and the payments that are essential both to the smooth flow and chronological development of project activities may sometimes fatally compromise the implementation of the project. And he warns that the feedback given by experts on management authorities to beneficiaries about the write-up and completion of financial application is often imprecise about what further information is needed. “Sometimes it comes very late or not at all,” says Ilie.

Finally, he bemoans the inadequate promotion of structural and European financing programs to the relevant beneficiaries and the failure to adapt the type of information to their needs and individual characteristics.

Sectorial Operational Programme ”Increase of Economic Competitiveness” – Financing Opportunities for Small and Medium-Sized Companies In the current macroeconomic context, characterized, among others, by the increasingly difficult access to available financing sources, orientation of ecoAnca Danilescu, nomic agents to Partner, Zamfirescu Racoti Predoiu mechanisms that were not so much valorized in the past has become a necessary and frequent conduct. Either we speak, for example, of the co-optation, in the business development, of international investment funds, or refer to the obtaining of aids under the various state aid schemes currently effective in Romania, all these became an attractive alternative to the traditional means of bank financing.

Although large enterprises have not been ignored in the action of facilitating access of private companies to financing, still, the overwhelming majority of state aid schemes approved by the competent authorities address to small and medium-sized enterprises, a sector which is considered to have strategic importance for the general economic development.

One of the framework programmes whose main objective is the support of durable development of small and medium-sized enterprises, presently unfolded in Romania, is the Sectorial Operational Programme “Increase of Economic Competitiveness” (POS CEE) 2007 – 2013, approved by the European Commission by decision no. 3472/July 12, 2007. The programme, administered by the Ministry of Economy, Commerce and Business Environment, in its capacity as management authority, is structured on five priority axes (each of them targeting, in its turn, certain major intervention areas, as the assigned names indicate): (i) Priority Axis 1 – an innovative and ecoefficient productive system, whose objective is the consolidation and sustainable growth of the Romanian productive sector and the establishment of a favorable environment for enterprises’ development; (ii) Priority Axis 2 – research, technological development and innovation for competitiveness, aiming to increase the research capacity by investing in the development of the related infrastructure and attracting young researchers and high-level specialists in, inter alia, companies with research departments; (iii) Priority Axis 3- information and communication technologies for private and public sectors, focusing on the support of the economic competitiveness through increasing the interac-

tions between the public sector, enterprises and citizens; (iv) Priority Axis 4 – increasing energy efficiency and security of supply, in the context of combating climate change, aiming to improve energy efficiency and to increase the share of electricity produced from renewable resources in the national gross electricity consumption; (v) Priority Axis 5 – technical assistance, whose object is to provide support for the POS CEE implementation process.

In 2012, the most calls for accessing of available POS CEE funds – still unfolding – were launched in Priority Axis 1. There are varied intervention areas, contemplating operations such as the support of competitiveness of small and medium-sized enterprises by acquisition of consultancy services not related to the current business of the firm, granting of financial support for the implementation of the international standards by the small and medium-sized enterprises etc.

The maximum value of the aid that can be granted to the applicants varies depending on the operation contemplated.

For example, the total estimated budget of the financial aid scheme for the acquisition of consultancy services is, for the period 2008-2013, of EUR 65 million, out of which EUR 53.77 million represent non-reimbursable European Funds ensured by the European Regional Development Fund and EUR 11.23 million from the national budget.

The maximum value of the aid granted for a project under the above scheme cannot exceed the equivalent of EUR 40,000.

Also, accessing of the funds made available in each of the financing schemes mentioned above depends on the meeting of particular criteria by the ones interested to benefit from the available resources. Speaking of the same financial aid scheme, the applicants have, inter alia, (i) to be microenterprises, small or medium-sized enterprises; (ii) to carry out their activity in Romania; (iii) not to have public debts and to have paid in due time the taxes, the obligations and other contributions to the state budget, special budgets and local budgets; (vi) to have the necessary financial resources for co-financing the project. We also specify that only the activities initiated after the signing of the financing contract between the intermediary body and the beneficiary are considered eligible for financing.

ADVERTORIAL

If Romania secured all the available EU structural and cohesion funds, it would post a 1.8 percent increase in its annual GDP, while an absorption rate of 100 percent of the funds allotted to agriculture would raise the GDP by 0.6 percent, Prime Minister Mihai Razvan Ungureanu told the inter-ministerial committee on the absorption of community funds.

According to Victorita Meirosu, an expert in structural funds, the absorption rate of European funds for rural development is about 20 percent at present.

“From the procedural perspective there are many things to improve. Given the 20 percent absorption rate in 2012, we have no chance of absorbing the remaining 80 percent by 2013, when the first period of the program ends, as the procedures get

Call for clarity

PARTNER CONTENT

www.business-review.ro Business Review | April 16 - 22, 2012

8 ACCESS TO FINANCE OPERATIONAL PROGRAMS (OP) Name: Regional Operational Program (POR) Allotted sum: EUR 4,568.3 million over 2007-2013 Strategic objective: supporting the economic, social, territorially balanced and sustainable development of the regions Priority axes: sustainable development of cities; improving regional and local transport infrastructure; improving the social infrastructure; developing the regional and local business environment; developing and promoting tourism Management Authority (AM): Ministry of Regional Development and Tourism Who can apply? l Public administration authorities l Public institutions l NGOs l Private companies, mainly SMEs and microenterprises Strategic objectives by 2015: l Creating 15,000 new jobs by the end of 2015 l Halting the increase of inter-regional differences in GNP (gross national product) per capita Specific results proposed by 2015: l 3,000 new jobs by supporting microenterprises l 4,000 new jobs within the supported business infrastructure l 500 hectares of renovated industrial space l 50 investment projects for developing the potential of tourism in natural areas Name: Sectoral Operational Program – Increasing Economic Competitiveness (POS-CCE) Allotted sum: EUR 3,011.1 million over 2007-2013 Strategic Objectives: Increasing the productivity of Romanian companies in

order to reduce the differences in average productivity between EU countries Priority axes: 1. developing an innovative and eco-efficient manufacturing system; 2. research, technological development and innovation for competitiveness; 3. information technology and communications for the private and public sector; 4. increasing the energy efficiency and safety of procurement in the context of controlling climate change; 5. technical assistance Management Authority (AM): Ministry of Economy, Commerce and Business Environment

Management Authority (AM): Ministry of Transport and Infrastructure Who can apply? l National administrators of railway, naval and road transportation infrastructure l National and regional administrators of aeronautical infrastructure l Operators of public railway transportation for travelers can be potential beneficiaries for Axis 2

Who can apply?

Axis 1: for productive investments: companies from productive sectors, SMEs and large companies, except for sectors stipulated in European legislation about structural funds and state aid; for other operations: SMEs Axis 2: research institutes, universities, SMEs Axis 3: SMEs, local authorities, NGOs Axis 4: energy companies, local authorities Axis 5: institutions responsible for the management and implementation of POS-CCE Specific results proposed by 2015: lAn average increase in productivity of about 55 percent of the EU average.

Name: Sectoral Operational Program for Environment (POS Mediu) Allotted sum: EUR 5,610.7 million over 2007-2013 Strategic objective: protection and improvement of the quality of environmental and living standards Priority axes: 1.extension and modernization of water and wastewater systems; 2. development of integrated waste management systems and restoration of historically contaminated sites; 3. reduction of pollution from urban heating systems in worst affected towns; 4. implementation of adequate management systems for the protection of nature; 5. implementation of adequate infrastructure for natural risk prevention in most vulnerable areas; 6. technical assistance Management Authority (AM): Ministry of Environment and Forests

Name: Sectoral Operational Program for Transport (POS-T) Allotted sum: EUR 5,697.6 million over 2007-2013 Strategic objective: promoting a durable transportation system ensuring the quick, efficient and safe transportation of individuals and goods Priority axes: developing a durable transportation system and its integration with EU transportation networks; developing nationwide transportation infrastructure; increase in environment and public health protection and safety of passengers; technical assistance

Who can apply?

Axis 1: regional water operators Axis 2: county councils Axis 3: local authorities and county councils Axis 4: administrators and conservators of protected areas, regional and local environmental protection agencies, institutions and public authorities, nongovernmental organizations, research institutes, universities, museums Axis 5: National Administration Romanian Waters Axis 6: management authority and intermediary bodies of SOP Environment.

Name: Operational Program for Development of Human Resources (POSDRU) Allotted sum: EUR 4,089.3 million over 2007-2013 Strategic objective: development of human capital and increasing its competitiveness by connecting education and long life learning with the labor market Priority axes: education and professional training; long life learning connected with the labor market; increasing the adaptability of both workers and companies; modernizing the public service for holding workforce; promoting the active measures for holding workforce; promoting social inclusion Management Authority (AM): Ministry of Labor, Family and Social Protection Who can apply? of Education, Research and Youth (MECT) l Agencies, structures under the coordination/subordination of the MECT and other public organizations involved in higher education l Public and private accredited higher education institutions l NGOs active in higher education, including student associations l Ministry

Name: National Program for Rural Development (PNDR) Allotted sum: EUR 7.5 billion over 2007-2013 Strategic objective: support the increase of competitiveness in the agrofood and forestry sectors, improvement of the environment, rural areas and quality of life in rural zones, diversity of the rural economy, starting and running local development initiatives Priority axes: increase of the competitiveness of the agriculture and forestry sectors; improving the environment and rural areas; quality of life in rural zones and diversification of the rural economy. ∫

Calling all corporate customers The local banking market has matured since lenders diversified their product and service portfolios and adapted them to the specific needs of different categories of corporate customers, from SMEs to large companies. They have also created products to serve the niche needs of their clients. ∫ ANDA SEBESI

Financing operations from European funds Many lenders active on the local market have financing operations from European funds in their portfolio, with BRD-Groupe Societe Generale, Raiffeisen Bank, UniCredit Tiriac Bank and CEC Bank among them. BRD, for example, has the EUROBRD program for companies that want to access structural funds.

Through it the lender provides financing facilities, adapted to the specifics of the accessed Operational Program, as well as financial consultancy in order to identify the optimal structure for financing.

“Following the increased absorption of European funds for all operational programs over 2011, we registered an increase in financing demand from

the eligible beneficiaries,” says Alina Iosep, manager corporate market, marketing and product management department at BRD-Groupe Societe Generale.

The EUROBRD range of financing products includes: letter of comfort (according to the operational programs requirements) to prove the capacity of the beneficiary to co-finance a project; bank guarantee for the advance paid by the funding institution; EUROBRD Suport credit to cover the gap between the moment when expenses are incurred and when the non-reimbursable funds are cashed; EUROBRD Investitii loan co-financing the private contribution needed to implement the project with post-accession European funds; and an additional loan financing the non-eligible expenses of the project.

Iosep says that the increased interest of existing and potential customers in developing investment projects with European funds and the range of financing options that include products to support the borrower’s current activity during the implementation period of a project are among the factors that have shaped the product portfolio.

“BRD will continue to be significantly interested in this field and will provide complete solutions adapted to specific needs,” says Iosep.

Elsewhere, Adrian Aurelian Raducan, manager in the structural funds department, corporate products and management know-how area in the corporate banking division at Raiffeisen Bank Romania, says that demand for such products is increasing for the bank.

“Plus, customers have taken a pragmatic approach both by adapting their projects to the financial resources that can be attracted from our bank and the chances their business has in their targeted market by trying to gage it as accurately as possible,” he says. Raducan adds that the introduction of the letter of comfort made the absorption of European funds efficient through the support offered by lenders to the Authority of Management (AM).

“Many of the projects for which letters of comfort were issued in 2010 were selected by the AM in 2011 and so the lender was involved in financing them.

Besides, there have been new calls for proposals accompanied by the letters of comfort we issued. If the projects have the chance to be selected by the AM they will be financed next year,” says Raducan.

www.business-review.ro Business Review | April 16 - 22, 2012

ACCESS TO FINANCE 9

A short guide to attracting private equity Building a strong business is a challenge and requires a huge effort to get something valuable on the market. All companies reach a stage when they need to obtain funding for their future development. Depending on the attractiveness of their business and other specifics, entrepreneurs might think of seeking a private equity firm to invest in their company. ∫ ANDA SEBESI

Financing for SMEs SMEs are often perceived as the main driving force of an economy. But since the current economic crisis such players have faced several challenges regarding the predictability of both the economy and consumption.

That means that entrepreneurs need to adapt to different and sudden changes like diminishing customer demand and the need to find other markets, to increase their range or even specialize on some products and services for profitability and efficiency reasons.

“2011 was a good period for Banca Transilvania (BT) including in terms of financing SMEs. The lender doubled its volume of loans for SMEs granted last year on 2009,” say representatives of BT. They add that 2011 brought both a simplification and a re-opening of access to credit for companies with a turnover of under EUR 1 million. At present, over 90 percent of the total number of loans approved by BT for the corporate sector are allocated to the SMEs. “Romanian entrepreneurs are also more optimistic about the development and stabilization of their businesses. The weight of investment credits in the total volume of credits has also increased,” they say. According to BT representatives, SMEs will obtain bank loans more easily if they present realistic business plans for a period of at least one year.

Meanwhile, Dan Emilian Croitoru, deputy executive director of the corporate network and public sector division at BCR, says that the lender will continue to finance SMEs in the near future, and that the volume of financing will depend on the development and evolution of the market. He adds that the bank expects financing for this sector to increase slowly, with a positive effect on the whole Romanian economy.

According to him, financing for construction (especially infrastructure), agriculture, medical services, telecommunication and IT suppliers and renewable energy are significant in the financing portfolio.

“New financing products have been structured lately, adapted to the different fields of activity (like credits for agriculture, pre-financing for exports and products with a long manufacturing cycle) and the immediate needs of SMEs (loans financing current activity, investment projects or VAT associated with these investments, and credits for temporary/seasonal expenses and inventories, factoring, etc),” concludes Croitoru.

The world is full of people with great ideas but not all of them can convince an investor to put up his or her money in order to transform it into a great business.

Building a flourishing company is a top goal of any businessperson and also a good source of job creation. Creating or extending a business requires vision, perseverance and a lot of money. Yet getting the right type of finance is still difficult for many companies.

Businesspeople that intend to attract a private equity firm to invest in their business must know that they have to convince the potential investors that their proposal is not a waste of time. They have to prove that their business has a high potential for growth on the medium and long term and is capable of delivering the best results on the market where it is active. Ultimately, all professional investors want to put their money in companies that bring them financial advantages. Not all of their investments work out. According to National Venture Capital Association (NVCA) data, up to 20 percent of venture-backed companies generate a significant return, 40 percent achieve moderate success and the rest fail. So of the many pitches private equity companies receive each year; they have to decide which are worth the risk.

Private equity firms decide to invest in a business based on significant criteria such as: management (commitment, vision), field of activity (potential for growth, competition, the market, niche products or services), business plan, the necessary investment, financial performances and options for exit after a number of years. Private equity companies aim to help a business to achieve its growth goals by offering finance, consultancy and specialized advice at different major stages of its development. They also try to create added value for a company in which they have put their money.

But not all businesses are right for a private equity firm because they have their own specifics that might not suit the investor’s agenda. Private equity can’t fund just any company and only the most dynamic ones or those with the highest potential for growth are selected. According to the European Private Equity and Venture Capital Association (EVCA), a private equity firm could be an option if you want to change the size of your business or take over one of your competitors, improve your management capacity, sell a part or all of your company, launch a new product or service, set up a new business, liquidate some of your assets, improve and develop your export performance, exploit the creativity and innovation of your team or recruit highly qualified professionals. But letting a private equity firm become a shareholder in your company means that you must be prepared to give up part of your company’s capital to it.

To attract a private equity firm you

should start with the preparation of a detailed and well written business plan.

Its content depends significantly on the specifics of each business but it has to include several key elements like: executive summary (to present the idea behind the business and the company behind the proposal), company history, management team, products and services, analy-

sis of your market and direct and indirect competitors, commercialization, operational management, financial projections, capital required and exit possibilities.

According to specialists there are three important questions that a private equity firm asks when deciding to invest in a company: Can we win? Will we win? Will it be worth it?

Eight questions to consider before asking a private equity firm to join you l Are you the kind of person who can grow a company to EUR 30 million or EUR 60 million in revenue in three to seven years? l Is your business model scalable to achieve that kind of growth? l Is the market big enough to support that kind of growth? l Do you have a concise plan for how you’re going to reach potential customers and persuade them to choose your company? l What might go wrong with your plan, and how are you going to deal with it? l Are you willing to dramatically change your business model if that’s what it’ll take to win? l Do you have a good understanding of your costs and capital needs? Are you offering investors a reasonable price? l Will investors be able to earn five to ten times their investment in five to seven years through a company sale or public offering?

www.business-review.ro Business Review | April 16 - 22, 2012

10 ACCESS TO FINANCE

EEA and Norway Grants State aid scheme gives support local economy businesses impetus Romania received almost EUR 100 million through EEA and Norway Grants over 2007-2009, and the same entities will make available a further EUR 306 million locally in the next five years.

Although only 30 percent of the total EUR 1 billion allocated to the local state aid scheme for investment projects over 2007-2011 was used, this form of financing has high potential. Specialists say the conditions are in place for more mid-size projects to be financed by state aid. ∫ ANDA SEBESI

Northern lights: Norway and other northern countries provide useful financing

∫ ANDA SEBESI Among the best known and most useful sources of financing are the EEA and Norway Grants. Norway Grants (the Norwegian Financial Mechanism) is a funding scheme to which Norway contributes alone, whereas the EEA Grants (the EEA Financial Mechanism) include contributions from all three EEA/EFTA states – Norway, Iceland, and Liechtenstein. In both funding schemes, Norway’s contribution makes up the most, namely 97 percent.

“The EEA and Norway Grants will make available for Romania approximately EUR 306 million in the next five years. This will make Romania the second largest beneficiary of the EEA and Norwegian financial mechanisms out of a total of 15 recipient states. The funding is earmarked to reduce social and economic disparities among the EEA countries and to strengthen bilateral relations between the donor and the beneficiary states,” say representatives of the Royal Norwegian Embassy in Romania.

The EEA and Norway Grants will contribute to co-financing of projects in key areas of support such as environmental protection and climate change, research and scholarships, civil society, green industry innovation, justice, cultural heritage and similar. Each of the areas will be managed by a program operator, agreed upon in the Memorandum of Understanding. Some program areas will be managed jointly by the program operator, in most cases a Romanian public

institution, and a Donor Program Partner, an entity from one of the donor states.

The areas eligible for funding under EEA and Norway Grants and their financial allocations will be settled in the Memorandum of Understanding, an agreement which is expected to be signed soon. “It will then take several months for the program operators to work out the rules and procedures of each program area. Therefore, most programs are expected to be open for project proposals at the beginning of 2013. Private companies are expected to be among the eligible applicants in some of the supported areas,” say the embassy representatives.

Norway is not a member of the EU, but it is integrated in the internal market through the European Economic Area Agreement – or the so-called EEA Agreement. As an integrated European partner, Norway and its EFTA partners are also committed to playing an active role in economic and social development in Europe. The EEA and Norway Grants were established when the EU expanded to include ten new member states in 2004.

Over 2004-2009, EUR 1.3 billion was made available for project funding in the 12 beneficiary states in Central and Southern Europe, plus Spain, Portugal and Greece. Over 2007-2009, Romania accessed almost EUR 100 million through the EEA and Norway Grants. This funding period is now over, but a new one has started. Norway and the EU have reached an agreement on a financial contribution of EUR 1.79 billion for the period 20092014, representing a 22 percent increase from 2004-2009.

says that the criteria seem to be too exclusive, as only one company has managed to be successful through the scheme, and this a partly state-owned one.

State aid is another way of getting money to develop a business and finance various investment projects. State aid schemes 1680/2008 and 753/2008 for Which sectors have shown mid-sized and large projects were interest? launched at the beginning of the current The investment projects financed so economic crisis. The eligibility criteria for far are mostly in the automotive field the mid-size scheme were demanding, (over 53 percent of total investments), folstipulating a minimum EUR 30 million inlowed by production (over 35 percent), vestment and at least 300 employees. Afbut other sectors also had projects fiter two years with just a handful of projnanced through state aid schemes beects and no marketing by Ministry of tween 2009 and February 2012, such as Public Finance, the criteria were relaxed medical services, construction, hotels, to EUR 5 million in investment and 50 machinery and renewable, with the toemployees in a two-step reduction, sendtal value of investment EUR 675.49 miling a positive signal. lion (including automotive and producSince October 2010, the more accestion), according to research conducted by sible minimum thresholds, buoyed by Noerr. economic green shoots, have seen inConsidering the large proportion of vestor interest increase steadily and the automotive projects, Sorescu says that number of the projects follow suit. “The the Ministry of Public Finance is very inState Aid Department in the Ministry of terested in approving projects in other Public Finance is really open to financing fields of activity, with high value-added investment projects via state aid, fitting and greater chances of a successful projwell with the interest of investors,” says ect. “This does not exclude other future Iulian Sorescu, associated partner and successful projects in the automotive head of the financial department at Nofield, as we must admit that automotive err Finance & Tax, one of the top conis one of the few sectors going well in the sultants in the state aid field. Moreover, last period. But projects in other fields he says that the grounds for a larger and under-developed areas are really number of mid-size projects financed by welcomed by the Romanian authorities,” state aid are in place, with the ball now says Sorescu. being in the court of investors, who Until now, according to Noerr, the don’t have as many resources for extenmid-size projects financed by the Rosions or greenfield projects during this manian government amount to around volatile period.

EUR 1 billion, with effective state aid of On top of that, Sorescu says that inabout EUR 327 million approved, out of vestors perceive the remaining validity which EUR 110 million had been paid by period of the schemes as too short for November 2011. The projects are extheir projects. Depending on the compected to create about 7,060 new jobs in plexity of the projects, it could be diffitotal. The main beneficiaries were Pirelli, cult to plan, apply to the Ministry of FiRenault, Aaylex Prod, Dacia, Delphi nance and deploy the investment by Diesel Systems, Premium Aerotec, Lufkin December 2013. “There are rumors that Industries, Remar and International Authe schemes will be extended for intomotive Components Group. vestments beyond 2013 and this would “We as consultants have seen a steady inbe a green light for potential investors,” crease in investors’ interest in projects fihe adds. As for the large projects, defined nanced by state aid in the last two years. as investment of over EUR 100 million The fact that we are currently working on and more than 500 new jobs, Sorescu seven projects confirms this trend. Past

Industries that secured state aid over 2009-2012 Industry Automotive Production Medical Construction Hotels Machinery Renewable Total:

Value of investment (EUR million) 360.46 238.86 37.16 15.18 9.8 8.31 5.72 675.49

Source: Noerr research

Weight of total (%) 53.36 35.36 5.5 2.25 1.45 1.23 0.85

www.business-review.ro Business Review | April 16 - 22, 2012

and current projects have ranged from small to large, with Premium AEROTEC and ContiTech being just two names from a total portfolio of about EUR 400 million of investments and 4,000 new jobs created,” said Sorescu. Noerr advised Premium AEROTEC, a company from the EADS/Airbus Group, on obtaining financing approval for state aid of about EUR 20 million, by preparing a business plan and technical and economic study, as well as taxation matters and other advice related to the firm’s approximately EUR 90 million greenfield investment in a production facility for aircraft parts.

“Moreover, we advised one of the largest German car manufacturers in its efforts to apply for state aid for its greenfield investment in Romania,” says Sorescu. Another successful project came from ContiTech Fluid Automotive Romania, a company in the Continental Group, which obtained a financing agreement for state aid. The automotive project consists of the extension of production in Carei, Satu Mare County, by a third hall in order to more than double the production capacity of hoses for heatingcooling. The total investment was more than EUR 15 million, of which over EUR 4.4 million of state aid was calculated to be eligible costs.

Who is eligible?

Companies that develop greenfield or expansion projects in different production activities can access state aid scheme and apply for such financing through to the end of 2013. The state aid scheme is divided into four different categories by investment and job creation: companies which will make investments of

ACCESS TO FINANCE 11 between EUR 5 and 10 million/EUR 10 and 20 million/EUR 20 and 30 million/upwards of EUR 30 million, and which create at least 50/100/200/300 new jobs as a result of the initial investment.

According to Sorescu, the steps to obtain such financing start with the company submitting a state aid application consisting of a list of documents required by law. Once approval is granted by the Ministry of Public Finance, the investment implementation can begin.

The last stage is the disbursement of state aid from the Ministry of Finance. During the investment implementation the company will receive cash corresponding to the investment level; however in the first period of the investment the necessary cash flow has to come from the company.

Time issues Sorescu says that the average period for obtaining state aid is about four to six months, depending on the complexity of the project. This period covers all stages of preparing the state aid documentation, submission to the Ministry of Finance and obtaining the financing approval.

“Sometimes this period becomes critical, as most investors want a quick launch for the project. However, the period can be reduced by the smooth flow of information and high efficiency in preparing the state aid project. Others investors have long-term projects and therefore the end of 2013 deadline requires them to restructure the project. An extension of the state aid scheme would please them a lot and the number of the projects would certainly increase significantly,” he says.

Chronology of public cases of state aid granted to investment projects by HG 1680/2008 Period 2007-2008 2009-2010 2011 2012 Total

Total investment (EUR million) 355.9 355.8 219.56 100.13 1,031.39

Approved state aid (EUR million) 103.21 111.28 80.13 32.81 327.43

Source: Noerr research

It’s important for business to get their hands on cash quickly

No. of jobs created 2,568 2,199 1,684 609 7,060

www.business-review.ro Business Review | April 16 - 22, 2012

12 ETHNIC FOOD

Ethnic food stores bring touch of spice to Bucharest Are you in the mood for some Indian garam masala, Italian burrata di bufala, Jamaican jerk spice or perhaps a few French Perigord truffles? Then you’re in luck, because all of the above can now be found in Bucharest. BR went off the beaten culinary track and discovered some of the businesses catering to those with more exotic gastronomic cravings. ∫ SIMONA BAZAVAN The number of ethnic food stores and delicatessens in the capital has been on the rise over the past few years, even though foodies continue to decry their scarcity.

Nevertheless, the scene has improved, with several local food enthusiaststurned-entrepreneurs venturing to start their own business out of passion and often from the frustration of not finding the ingredients they need elsewhere. Three of these gastro-pioneers told BR their stories, which are detailed below. But there are many more.

Several other stores in the capital have established a solid reputation among gastronomes, both expats and locals.

The Comtesse du Barry stores are probably the best stop for haute cuisine aficionados looking for gourmet French products. There are two locations to choose from in Bucharest – one near the

Romanian Athenaeum (2-4, Episcopiei Street) and another at Baneasa Shopping City. Outside the capital there are another two Comtesse du Barry stores in Timisoara and Constanta. Also catering for a French feast are the two Delicateria Traiteur shops – one in the Dorobanti area (22-24, Putul lui Zamfir Street) and the second in the Carrefour Feeria Baneasa commercial gallery. Another option is LaReserve online store.

Still in Europe but moving a bit farther south, several Italian restaurants in Bucharest also host stores or sell Italian ingredients. There are the Salsamenteria Pipera (55, Pipera Blvd) and Grano Italian Fine Food (40, Putul lui Zamfir). Lovers of Italian cuisine can also sate their culinary desires at the Sapore Toscano specialist store (91-111, Floreasca Road), which sells everything from truffles, Chianti wine and grappa to several varieties of Tuscan cheese

www.business-review.ro Business Review | April 16 - 22, 2012

ETHNIC FOOD 13

and meat products.

The Greek community in Bucharest is one of the most long established and there are quite a few specialized outlets purveying the country’s famed cuisine. They include the Ellada chain of stores (Amzei Square, Floreasca, Dorobanti and other locations), Magazinul Etnic (14, Decebal Blvd) and La Bunataturi (29, Dorobantilor Road) which also stock traditional Romanian products.

For more exotic tastes, there are several Halal butchers’ stores and Arabic pastry shops in Bucharest, while those interested in Chinese food will find outlets at the Dragonul Rosu shopping center.

For standard international ingredients also check the large consumer goods retailers which in recent years have begun stocking more and more products from around the world.

manian emigrants in Europe, North America and Australia, in July 2010 Gheorghe Florescu took his passion for coffee a step further and with his family opened the store.

He now sells Romanian consumers some of the world’s most exclusive coffees – Panama Boquete Geisha, Saint Helena, Jamaica Blue Mountain and Nepal Mount Everest Supreme – and has launched five personal brands based on the Armenian tradition passed down to him by his mentor, the coffee supplier of the Royal family, Avedis Carabelaian. The shop also sells wines such as Casa Isarescu, the famous Armenian brandy Ararat, freshly roasted peanuts, cashews, hazelnuts, almonds and pistachios, Belgian chocolate, honey specialties and copper coffee pots.

Its best sold products are the coffees, wines, freshly roasted peanuts and gourmet sweets, books and CDs.

Gala Food

Produce: spices Address: 25, Tudor Stefan Street, Dorobanti area Oana Bakovic and Bojan Spasic

Produce: Portuguese Address: 111-113, Floreasca Road It all started with a trip to Lisbon, the Portuguese capital, says Luiza Rudeanu, the store’s owner. “I was impressed by a small gourmet store offering tastings of green tomato jam and olive oil and sea salt spreads. I bought some tomato jam and other preserves and I fell in love with these products. Now they are always available in the store,” she told BR. Gala Food was founded in 2009, only three months after its owner returned to Romania, although she had no previous entrepreneurial experience whatsoever. In 2010 the shop was relocated to the Floreasca neighborhood, in search of better business and a larger location.

The outlet stocks over 50 types of wines, 30 kinds of fish and seafood preserves, oils, sweets, cheese, meat products and various accessories. All items are directly imported from Portuguese producers. The wines and preserves are the best sold products, says Rudeanu adding that each year she introduces new products.

Delicatese Florescu Produce: gourmet coffee Address: 6, Radu Cristian Street and 16, Regina Elisabeta Blvd, inside the Mihai Eminescu bookstore Delicatese Florescu is Romania’s first true gourmet coffee shop, its owner claims. After writing his memoirs, Confessions of a Coffee Seller, which are widely read both at home and by Ro-

Magazinul de Mirodenii

“Our business is about spices, their stories, their extraordinary qualities and the inspiration they provide,” Oana Bakovic told BR. She set up Magazinul de Mirodenii (The Spice Shop) with Bojan Spasic as a small family business last September after mulling over the idea for more than a year.

The store stocks about 200 spices and blends from around the world. This includes 90 pure spices which are directly brought from their country of origin – 40 percent of which are certified organic – and 40 blended varieties, plus several types of salt and pepper, oils and accessories.

Bakovic says the shop’s customers are as diverse as the products it sells, but what they all have in common is a passion for healthy and creative cooking.

The store’s best sold products include: turmeric, brooklodge mix (Irish), berbere mix (Ethiopian), black lava salt, lime leaves, ground orange peel, baharat, fajita, lemongrass and Thai tamarind.

The outlet sources its products from two UK-based spice traders and has direct contact with a producers’ cooperative in Sri Lanka. As for the owners’ future plans, Bakovic says they want to expand their product portfolio and even move into growing spices themselves.

www.business-review.ro Business Review | April 16 - 22, 2012

14 IN TOUCH FILM REVIEW

WHO’S NEWS Business Review welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro

Ion Capdefier has joined Tuca Zbarcea & Asociatii Tax as ofcounsel advisor. He has over 35 years of professional experience in the business field, 20 of which were spent in the fiscal area. Some of his previous positions include general director in the Ministry of Finance and the National Agency for Fiscal Administration (ANAF). Tuca Zbarcea & Asociatii Tax is the fiscal consultancy division of the law firm.

Sorana Bogdana Mantho is the new corporate affairs director for Philip Morris Romania & Philip Morris Bulgaria. With 20 years of experience in the legal profession – out of which she has spent 13 in legal management at top telecommunication and heavy industry companies – Mantho was, for the last five years, the senior counsel heading the law departments for the tobacco firm’s Romanian and Bulgarian operations. Her appointment follows the departure of Andrei Vasilescu who, after 16 years with the firm, has decided to leave to pursue personal entrepreneurial endeavors.

Cristina Mihai has been promoted to managing associate at bpv Grigorescu Stefanica law firm, having been a member of the team for more than six years.

Before this, she held the senior associate position. Mihai previously worked in the legal departments of two leading multidisciplinary consultancy companies. Her main areas of expertise are competition, commercial, banking and financial, construction and industrial project law, all of which are practices in which she has gained significant experience, providing consultancy and legal advice in a wide range of transactions. Mihai is a member of the Bucharest Bar, a graduate of the Law Faculty of Bucharest University and has a master’s in International and European Business Law from Paris I Panthéon Sorbonne University.

member of the Bucharest Bar since 2006 and provides advice in issues related to labor and tax law, public procurements, European and intellectual property law. Before joining the firm she worked as legal adviser for a large pharma company in Romania. Randjak has more than six years of experience in labor and tax law, providing consultancy in matters regarding individual and collective labor relations, business transfer and outsourcing, occupational health and safety regulations, labor law and tax law issues in the context of reorganization and corporate transactions for a range of industries, including energy, retail, automotive, IT&C, medical and pharma services.

Raluca Marcu has been promoted to senior associate in the litigation practice of bpv Grigorescu Stefanica law firm. She has been with the law firm since 2006. Marcu has experience in taxation law and administrative disputes, public procurements and civil law, successfully assisting local and international companies in courts of law and arbitration courts. Previously, she practiced in the consultancy department of the firm, where she gained experience in business transactions and was involved in major merger and acquisition and corporate law projects. Raluca graduated from the Law Faculty of Bucharest University in 2006 and became a member of the Bucharest Bar in 2007.

Ioan Roman

was promoted to managing associate at bpv Grigorescu Stefanica law firm. Previously, she served as senior associate for the same firm. Randjak has been a

has been promoted to senior associate in the litigation practice of bpv Grigorescu Stefanica law firm. He is specialized in professional litigation, debt recovery, commercial arbitration, and civil disputes, as well as in court order enforcement proceedings.

Roman also has experience in administrative and banking law disputes, representing players on the energy and telecom markets and in the banking sector. During his practice, he has represented international companies in labor law disputes and provided legal assistance in drafting the group restructuring policies. He graduated from the Law Faculty of Bucharest University, and is a member of the Bucharest Bar.

ISSN No. 1453 - 729X

FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi ART DIRECTOR Alexandru Oriean PHOTO EDITOR: Mihai Constantineanu PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu

Cristina Randjak

Salmon Fishing in the Yemen

Every-fin’s going swimmingly: Emily Blunt and Ewan McGregor fish for compliments

DEBBIE STOWE

Poor Fred Jones. A middle-aged government fisheries wonk, he spends his working days selecting the most exciting pictures of fish for piscatorial reports. Meanwhile at home he gets more affection from the koi carp in his garden pond than from his cold fish of a wife. But a sea change is coming for our Fred (Ewan McGregor), in the form of glamorous Harriet Chetwode-Talbot (Emily Blunt), a high-achieving corporate type who represents a loaded Yemeni sheikh (Amr Waked). Are there any poor sheikhs? Anyway, this one likes fishing and has got a spare 50 million quid lying about that he wants to spend on establishing… yes: salmon fishing in the Yemen.

Spoilsport Fred points out that this is hubristic folly, not least because the desert is not known for providing suitable conditions for Atlantic salmon. Who tend to be partial to some water. But with the British government pushing the project as some rare positive PR against the backdrop of the war in Afghanistan, Fred is reluctantly caught in the net of the unlikely scheme.

The three plot strands are the progress of the project itself, the bond developing between Fred and Harriet and the sometimes calculating, sometimes hapless in-

volvement of the government, championed by the prime minister’s acid-tongued press secretary Patricia Maxwell (Kristin Scott Thomas). These threads are in turn uplifting, sweet and wickedly funny.

By trying to cover drama, romance and comedy bases, the film does overextend itself a little. It can be uneven in places – a couple of Al Qaeda scenes strike an odd note and a late twist in the will they/won’t they love story is a contrivance too far. Clichés are dispensed like so much fishing bait and the whole romantic narrative – though winning in its way and well acted – feels like it belongs in an inferior film.

This is because the salmon storyline and the comic government subplot are so enjoyable. You probably never thought you would cry over salmon (except maybe the prices of the smoked stuff), but if you are of a sentimental nature you’ll come pretty close here. The concept is so preposterous that it’s hard not to find the proceedings fun and characters likeable.

The upbeat tone is prevented from becoming too syrupy by the comic interludes involving devious government highups, notably Scott Thomas’s PR guru. Nobody dispenses elegantly withering sarcasm with the panache of KST. This is a peach of a part for her and she delivers ably on a sharp script, with some of the funniest scenes her online exchanges with the prime minister, which neatly and wittily expose the cynicism behind political spin.

Be patient with this slow-build film, and it will get you hook, line and sinker.

PUBLISHER Anca Ionita EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Ana-Maria Stanca SALES & EVENTS Ana-Maria Nedelcu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat

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Director: Lasse Hallström Starring: Ewan McGregor, Emily Blunt, Kristin Scott Thomas, Amr Waked On: check listings