SMES / More than 4,000 small and medium-sized companies will get access to low-interest loans after the European Investment Fund signed five guarantee agreements under the SME Initiative. The loan guarantees will allow United Bulgarian Bank, Raiffeisenbank Bulgaria, UniCredit Bulbank, ProCredit Bank and EIBank to provide a total of €385 mn of soft financing. The five banks will receive a total of €102 mn in the form of guarantees to encourage them to finance small and medium-sized enterprises, as well as microenterprises and startups.
CLUSTERS / Clusters will receive a total of €20 mn under the Innovation and Competitiveness Operational Program to develop their capacity. The procedure is open to all types of clusters: in the early stages of development, developing and developed ones. The minimum grant per project is €50,000 and the maximum grant ranges from €200,000 for newly set-up clusters to €1 mn for developed ones. The public financing can cover between 35 and 90% of the project costs. Applications at https://eumis2020.government. bg until 28 April.
EFFICIENCY / Large enterprises will receive a total of €50 mn under the Innovation and Competitiveness Operational Program to improve their energy efficiency. The procedure is open to companies in extraction industry, processing industry, electricity and heating production and distribution, water supply and sewerage, and construction that have completed three full financial years. Candidates need to undergo an energy audit and prepare their project proposals based on the recommended measures. The grant per single project can range between €250,000 and €1.3 mn and cover 25 to 50% of the project costs. Applications at https://eumis2020.government.bg until May 19.
EXIT / ADM Capital and the European Bank for Reconstruction and Development have sold their 30% interest in Bulgaria's Prista Oil Group to the founders and majority owners of the business, the Bobokov brothers Atanas and Plamen. The transaction, valued at €50 million, was financed with a loan from UniCredit Bulbank. Through the group, the two former shareholders indirectly held interest in starter battery manufacturer Monbat and motor oil producer Prista Oil. Their exit came a little earlier than initially envisaged. However, they will keep their direct interest in Monbat. In 2013 they provided additional financing and acquired 20.8% of the public company.
ANOTHER GROCERIES CHAIN DOWN / Piccadilly groceries retail chain file for bankruptcy. The company has debts of €43 mn and only €13 mn in assets. The bankruptcy date was set as at the end of 2012, probably to help creditors challenge any acts of the owners that might have decreased the value of the company. During the last years the ownership of Piccadilly followed a convoluted path and finally most of the assets were transferred to Select Trade ЕOOD, leaving behind Piccadilly EAD ad an empty-shell company with huge debts. The bankruptcy followed the end of the presence of Carrefour in Bulgaria, which was owned by Greece's Marinopoulos Group.
SHOPPING IN GERMANY / Bulgarian software company Bulpros acquired Germany's Group Business Software. The price of the deal is €11 mn. The transaction will allow Bulpros to expand in five new countries. If Bulpros succeeds to reach annual revenue of €50 mn, it will become the biggest Bulgarian software development company. Bulpros obviously likes the German market - last year it acquired a stake in Innotec Marketing.
BEST POST-CRISIS PERFORMANCE / Bulgaria' s banking sector earned BGN 1.26 billion (€644 mn) net income in 2016, which is its best performance since 2008. The result is 40.5% higher year-onyear but stands below the historic record of BGN 1.373 billion eight years ago. Some €95 mn of the net profit came from the sale of Visa Europe, which is a one-off effect for banks. The five largest lenders combined account for 71% of the industry's profits, down from 82% in 2015, with UniCredit Bulbank, DSK Bank, Raiffeisenbank Bulgaria, Postbank and UBB being the top earners on the market. A significant increase in profitability was registered in the relatively small Bulgarian-American Bank, First Investment Bank and Teksim Bank. Tokuda bank, Piraeus Bank, Victoria bank and the branches of Isbank, ING Bank and BNP Paribas ended 2016 with a combined net loss of €42 mn.
NEW PRODUCT / SOFIX based ETF to start trading on the London Stock Exchange, announced Expat Asset Management, the managing company of the first Bulgarian exchange - traded fund (ETF). The exchange-traded fund tracks the performance of the SOFIX, which is the main index of the Bulgarian Stock Exchange. The cross-listing of Expat Bulgaria SOFIX UCITS ETF on the LSE will allow the ETF to become the transmission vehicle of larger capital flows from foreign investors to the Bulgarian capital market. Expat Asset Management plans to launch another four ETFs, which will track the performance of the main stock indices in Greece (ASE), Bucharest (BET-BK), Prague (PX) and Warsaw (WIG20). These funds will also be cross-listed on both the BSE and the LSE.
INCREASED LOSSES / It seems that the National Electricity Company (NEK) can't miss a year without a piece of bad news. NEK, which is still the backbone of Bulgaria's energy system, posted a €64 million loss in 2016. Though significantly lower than the record losses in 2013 and 2014, it still represents а 50% increase compared to the 2015 loss. Last year's loss was probably due to increased interest expenditures. In 2016, NEK had to borrow more than €1 billion to repay debt to suppliers and pay compensation to Rosatom after losing the arbitration case for the termination of the Belene NPP project.
DIVERSIFICATION IN THE GAS SECTOR / Interconnectors that are supposed to bring energy security to Bulgaria face expected problems. The newly opened Bulgarian-Romanian gas link will remain idle for the foreseeable future because no companies have turned up to use its capacity. In the meantime, the Greek-Bulgarian interconnector, whose construction is planned to begin in 2018, has been unable to attract enough companies willing to use its 3 bcm annual capacity.
Only 55% of the pipeline capacity has been reserved, casting doubts on the commercial viability of the interconnection project.
FUTURE PLANS / The Bulgarian Energy Holding (BEH) has bought the documentation for the Bulgarian section of the terminated NABUCCO gas pipeline project, which in 2012 lost the race against the Trans Adriatic Pipeline (TAP) project to carry gas to Europe from the Shah Deniz II field in Azerbaijan. The NABUCCO project, however, has completed all the pre-construction procedures and is shovel ready. BEH will probably use it for gas transmisson from either the Trans-
Anatolian Natural Gas Pipeline Project (TANAP) or the Gazprombacked Turkish Stream project.