The European Bank for Reconstruction and Development (ERBD) is providing €34.2m ($48m) to fund the construction of a warehousing complex outside Nizhny Novogorod that will serve the automotive (and other) industries.
Nizhny Novogorod is established as an automotive manufacturing base in Russia. The sector accounts for 50 per cent of the region’s engineering industry, with 34 per cent of all trucks and 26 per cent of the buses produced in the country being made there. Car manufacturing began in Nizhny Novgorod in 1932 with the construction of the Gorky Automobile Plant and today GAZ is the region's largest company.
However, what the area has always lacked is good quality warehouse space and logistics facilities. “Until now the region has offered virtually no modern warehousing facilities to support an efficient automotive supply chain. We're pleased to be filling that need now,” said Miles Jones at Griffin Partners, the Moscow-based asset management group responsible for developing the site.
The logistics park will be situated on a 11-hectare greenfield site next to the M7 motorway on the eastern edge of the city.
The complex is being built in two phases; the first of which is expected to be complete and ready for tenant fit-out in the next few weeks. As yet no company has been specifically named and the current crisis has slowed the rate at which the initiative is progressing.
EBRD is currently financing the first of three buildings over a 65,000m2 area of construction. The total project will cover approximately 180,000m2 and Griffin Partners will look to EBRD for the financing of buildings 2 and 3 once the financial markets settle down.
Once back up to speed the EBRD says the new complex will allow prospective clients to lower their storage costs significantly by complying with international energy efficient standards.
The EBRD’s funds will be disbursed in stages and comprise a ten-year loan of €30.2m ($42.5m) with an eight-year subordinated loan of €4m ($5.6m).
The borrower is OOO Kstovo Industrial Park 1, a joint venture between Griffen 2 Capital Business and the Amstar Global Fund 1, an affiliate of investment and development company, Amstar Group.
There are ten plants in the Nizhny Novgorod region and other areas of the Volga-Vyatka economic district producing assembled units, accessories and components for the automotive industry. Among them are AO Etna, Zavolzhye Motor Plant (ZMZ), Lyskovo Electrical Engineering Plant, Pavlovo Tool Plant, Bor Glassworks, and Bogorodsky Tannery.
New auto industry plants have been built in Pavlovo (buses), Zavolzhe (Caterpillar tractors), and Arzamas (car parts). Various goods and raw materials for the region's auto industry are supplied from plants in the Volga region, the Urals, and southern Russia.