#1EGAP INSURANCE OF CZECH FOREIGN INVESTMENTS AND INVESTMENT LOANS INTO UKRAINE Michal Pravda Deputy Director of Export Credit and Investment Insurance Department 口 EGAP 1.7.2021#2PRESENTATION WILL BE ABOUT K > What is EGAP, what we offer > Basic conditions of insurance of Czech foreign investments and investment loans, covered risks > Possibilities of insurance of Czech investments into Ukraine EGAP 2#3K WE SUPPORT CZECH EXPORT AND CZECH INVESTMENTS ABROAD > Export Credit Agency (ECA) Governed by international regulations (OECD Consensus) > Supports Czech export and investments since 1992 > In 2017, EGAP celebrated the 25th Anniversary > Full state ownership and state guarantee covering all EGAP obligations > State support of export and foreign investments by means of insurance of territorial as well as commercial risks EGAP 3#4INSURANCE OF FOREIGN INVESTMENTS OF CZECH COMPANIES > Eligible foreign investment is a share of a Czech investor on his foreign daughter company (fully owned, majority, minority share, J/V) > Long-term investment for at least 3 years > Investor can be a Czech company > Insurance protects the investor from territorial (political) risks that could threaten his investment › An insurance loss is a full or partial loss of value of the investment, caused by following events in the host country: >> impossibility of conversion and transfer of returns, expropriation, violent political acts incl. war and terrorism > Commercial risks are not covered for the investor > Self retention 2,5 % EGAP#5INSURANCE OF FOREIGN INVESTMENTS OF CZECH COMPANIES Insurance benefit INVESTOR EGAP EG EGAP Insurance policy Investment to foreign company Credit for the financing of investment BANK FOREIGN COMPANY K 5#6INSURANCE OF INVESTMENT LOANS › Czech investor, which has already some experience in the sector he is investing in > To the insured bank we cover both territorial and commercial risk of non-repayment of the loan due to debtors' financial insolvency or unwillingness to pay › Investment loan is provided for acquisition of long-term property to a foreign company of the Czech investor or for acquisition of a foreign company by the Czech investor > Foreign investment has to be majority owned by the Czech investor > There should be equity contribution of at least 25% › Business plan, financial model, feasibility study, due diligence › Self-Retention 5 % EGAP 60#7INSURANCE OF INVESTMENT LOANS insurance contract of I type € EGAP possible indemnification of bank if the credit is not paid back insurance contract of If type credit for financing investment guarantee for credit repayment in case of commercial risks € BANK INVESTOR credit for financing invesment through investor EGAP investment into foreign company credit for financing investment directly to the foreign FOREIGN COMPANY company K 7#8POSSIBILITIES OF INVESTMENT INSURANCE INTO UKRAINE › In 2020, OECD category improved from 7 to 6 - still higher risk > Country limit more than 2 500 mil. CZK, currently utilization of 28 % › Current exposure - export credits (both ST and LT) on 16 different UKR debtors (machinery, food and beferages, nuclear technology) > Historically insured 1 investment, good experience > In the past EGAP paid out very high indemnifications, last 5 years the payment experience is good › BIT between Czech Republic and Ukraine is valid › Insurance premium rates: EGAP 1: 0,92 % p.a. If: loan with 8 years tenor (1+7, 2+6 etc.) 4,80 % -6,72% flat (according to rating) 8#9Insurance opportunity INSURANCE PROCESS . . Introductory meeting Structuring of the transactions Application for insurance preparation Preliminary assessment • Prescoring Limit and rating indication, insurance premium • Comprehensive assessment by underwriting and risk department Approval process Insurance conditions Final assessment • EGAP 6#10THANK YOU FOR YOUR ATTENTION Michal Pravda EGAP Vodičkova 34/701, 111 21 Prague 1 Mob.: +420 607 610 477| Phone.: +420 222 842 348 [email protected], www.egap.cz 口 EGAP