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In accordance with the methodology for expressing an independent opinion on the compliance of bonds with the principles of social bonds (second party opinion), the «Expert RA» agency confirms that the second issue of non-government bonds of «Damu» Entrepreneurship Development Fund» JSC (hereinafter - the Bonds) continues and will comply with the principles of social bonds (SBP) of the International Capital Markets Association (ICMA) (hereinafter - the Social Bond Principles) until their redemption.
The Bond issue fully complies with the four basic criteria of the Social Bond Principles, namely:
– Use of funds;
– Project assessment and selection process;
– Funds management;
– Reporting.
To form an independent opinion, «Damu» Entrepreneurship Development Fund» JSC (hereinafter - the Fund, Issuer) provided all the necessary information. In the course of work, the Agency did not identify any signs of unreliability in the submitted materials.
The Fund presented documents establishing the Issuer’s approaches to the assessment and selection of projects, approval of financing, management of funds, preparation and publication of reports within the framework of «social» financing.
Parameters of issuing:
|
Type of security |
Unsecured coupon bonds |
|
Issue identification number and date of assignment |
ISIN KZ2C00008068 от 08.09.2021 |
|
Volume of issue |
1,000,000,000 tenge |
|
Start date of placement |
15.09.2021 |
|
Maturity date |
15.09.2026 |
Justification of the opinion
Use of funds.
The Fund, as an institution for the development of entrepreneurship in the state policy of industrial-innovative and socio-economic development, attaches utmost importance to the social factors of sustainable development of society and considers social responsibility as one of the key principles of its activities. The Fund is a financial operator for the implementation of programs for subsidizing part of the interest rate on loans within the framework of the Rules for subsidizing part of the interest rate, approved by the Joint Order of the Ministries of the Republic of Kazakhstan “On approval of rules, forms of state financial support, sectors of the economy in which private business entities operate, subject to state support”, registered in the Register of State Registration of Normative Legal Acts under № 33681 dated 27.11.2023.
As part of its sustainable development policy, the Issuer through the realization of the issue of social bonds, support was provided to micro, small and medium-sized private enterprises (hereinafter - SMMEs). All funds raised from the issue of Bonds were directed to the «Bank RBK» Joint Stock Company (hereinafter – «Bank RBK» JSC) within the framework of the Loan Agreement on participation in the Damu-Regions Financing Program for micro-, small and medium-sized private enterprises has been determined - investment, replenishment of working capital, refinancing, and certain sectors have been established in accordance with the General Classification of Economic Activities (hereinafter - GCEA). After the Fund transferred funds to the account of «Bank RBK» JSC, project selection activities were carried out and Lending to SMMEs that meet the terms of the loan agreement was carried out:
|
GCEA |
Loan amount, tenge |
Rate at the expense of the Fund with a subsidy / rate at the expense of the Fund without a subsidy |
Purpose |
|
49410-Freight transport by road |
145.94 million (18.72 million, 33.54 million, 43.68 million, 50 million) |
8% / 14% |
Replenishment of working capital/ Refinancing |
|
85100-Preschool education |
160 million |
8.5% / 14.5% |
Investments |
|
56100-Restaurants and food delivery services |
400 million |
8.5% / 14.5% |
Investments |
|
85200-Primary education (first stage) |
300 million |
8.5% / 14.5% |
Investments/Replenishment of working capital |
By 2023, the Issuer has spent the funds from the placement of the Bond issue in full in the amount of 1 billion tenge. The Fund, through Bank RBK JSC, provided financing for the implementation of 7 projects for the implementation of freight transportation by road, the operation of restaurants and the provision of food delivery services, the operation of pre-school and primary education facilities, which made it possible to create 84 jobs and make tax deductions to the budget in in the amount of 61.5 million tenge. Therefore, the Issuer provided support to a business group vulnerable during the COVID-19 pandemic - SMMEs and improved the well-being of the population due to the preservation and/or creation of jobs. Such use of funds is consistent with the Social Bond Principles.
Project evaluation and selection process. The project assessment and selection process were carried out in accordance with the approved Social Bond Policy. As part of the concluded Loan Agreement on participation in the Damu-Regions Micro, Small and Medium-Sized Enterprise Financing Program № 64 DR III dated 21.10.2021 (hereinafter - the Loan Agreement), the Fund provided funds to «Bank RBK» JSC, including from placing a Bond issue in the amount of 1 billion tenge to finance SMMEs. The Loan Agreement establishes clear requirements and conditions for providing loans to SMMEs with an exhaustive list of sectors of activity in accordance with GCEA. «Bank RBK» JSC took measures to select and finance SMMEs in accordance with the credit policy that meets the requirements of the loan agreement. In 2022, «Bank RBK» JSC concluded 7 Framework Agreements to provide financing to SMMEs. «Bank RBK» JSC is responsible and reports to the Fund for the use of allocated funds. The Fund monitors financed projects for the intended use of funds and compliance of the project with the terms of the Loan Agreement concluded between the Fund and «Bank RBK» JSC, in accordance with the internal documents of the Fund and the requirements of the Loan Agreement. The project assessment and selection process meet the Social Bond Principles.
Funds management. The fund management process complies with the requirements of the approved Social Bond Policy. The received funds were credited to a special account of the Fund before distributing them to the selected STB/MFO/LC. As part of the concluded Loan Agreement, the Fund provided funds to «Bank RBK» JSC to finance SMMEs that meet the terms of the Loan Agreement. «Bank RBK» JSC reports to the Fund on an ongoing basis for the intended use of funds, and the Fund, in turn, monitors the loan provided by «Bank RBK» JSC during the term of the agreement. The Fund's use of raised funds is confirmed as part of the annual audit of financial statements conducted by an independent audit company. Therefore, the management of the funds is consistent with the Social Bond Principles.
Reporting. The process of disclosing information on the use of funds complies with the requirements of the approved Social Bond Policy. The Issuer draws up an annual report and posts it on the official website of the Fund, which contains, among other things, information on the placement of funds raised from the placement of the Bond issue, the socio-economic effect, which includes indicators - volumes of financing, number of SMME projects supported, number jobs created, tax revenues. Therefore, the disclosure is consistent with the Social Bond Principles.
Regulatory Disclosure
When expressing an independent opinion on the compliance of bonds with the principles of social bonds, the Methodology for expressing an independent opinion on the compliance of bonds with the principles of social bonds (second party opinion) https://raexpert.ru/ratings/methods/current (came into force on 07.03.2024) was used.
The key sources of information used in the analysis were data from «Damu» Entrepreneurship Development Fund» JSC, the National Bank of the Republic of Kazakhstan, as well as data from «Expert RA» JSC. The information used by «Expert RA» JSC as part of the analysis was sufficient to apply the methodology.