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. Last Updated: 07/27/2016

EBRD Charts Course for Aerospace

MTSirocco is scheduled to sign a contract Friday with Aviaexport, Tupolev and Aviastar-SP to buy 25 more Tu-204-120s.
The largest foreign investor in Russia has spent a decade funding enterprises in nearly every sector of the economy with remarkable success, but it has never managed to get off the ground -- until now.

The European Bank for Reconstruction and Development said Wednesday that it is heading for aerospace.

Next month the investment bank's board is expected to formally approve a $50 million loan to help build Tupolev cargo aircraft, and it is currently in talks with U.S. engine manufacturer Pratt & Whitney over the possible takeover of Perm Motors Plant, which makes gas turbines and aircraft engines.

"Investing in Russia's aerospace industry is part of EBRD's Russia strategy," EBRD spokesman Richard Wallis said. "What EBRD is committed to is trying, through its investments, to help Russia regain its leading position in specific high-tech areas where it was once a world force, and where we believe it can be again."

The $50 million loan is earmarked for Sirocco Aerospace Russia, a company created by Egypt's Sirocco Aerospace International, which has the exclusive rights to market and sell medium-range Tu-204-120 aircraft fitted with Rolls-Royce engines and Honeywell avionics.

"It is a pre-export finance. It is specifically related to the first exports to Chinese airlines," Wallis said, referring to a deal Sirocco signed last year with China to deliver five cargo versions of the Tu-204-120.

"If the scheme works well there is no reason why it should not be applied to other customers," he added.

Egypt's Air Cairo airline and TNT global express service are already operating Tupolevs leased from Sirocco.

On Friday, Sirocco is scheduled to sign a contract with state export agency Aviaexport, design company Tupolev and the Aviastar-SP manufacturing plant for 25 more planes, which are to be delivered over the next five years.

Since 1996, Sirocco has invested some $170 million into Aviastar-SP, and this June it signed a $280 million investment agreement with the Russian government in exchange for 25 percent minus one share of both the Tupolev design bureau and Aviastar-SP.

Boris Brusilovsky, director of Aviastar-SP's Moscow office, said the agreement will give the plant a second lease on life.

This year the plant produced only two planes.

"This [EBRD loan] is a landmark," Brusilovsky said.

Sirocco Aerospace Russia president Boris Zenkov couldn't agree more: "It's important that a foreign bank is interested in this project at a time when no Russian bank will commit itself to risks in the aviation industry," he said.

The EBRD is also looking at helping Pratt & Whitney buy the 25 percent of Perm Motors held by tycoon Vladimir Potanin's Interros holding. P&W already owns 25 percent of Perm Motors.

"The EBRD has been invited by P&W to participate in the deal and is very interested," Wallis said, declining to elaborate. "We have long been in discussions with them, but it is far too early for us to give any details."

Neither Interros nor United Technologies, P&W's parent company, would comment.

"We have had a number of proposals, including one from Pratt & Whitney. Negotiations continue," Interros spokesman Mikhail Barkovets said.