LM Legal Services Blog

Reuters

Bulgaria has attracted 24 billion Euros in foreign direct investment since 2005, when the Socialist-led
government came to power, but the global crisis has hit the flows and put an end to the credit-fueled economic boom.

Economists say Bulgaria is now paying the price for not using the boom to boost productivity and encourage exports. Here are capital flows went and some major investments since 2005: (in million euros)

                       2005      2006      2007      2008      2005-08
 REAL ESTATE DEALS     533.8     1,778.0   2,505.1   1,900.3   6,717.2
 FINANCIAL SERVICES    667.3     799.4     2,112.5   1,485.9   5,065.1
 PROCESSING INDUSTRY   868.2     1,064.7   906.2     810.9     3,650.0
 RETAIL                576.9     964.5     1,237.4   796.9     3,575.7
 CONSTRUCTION          171.6     501.0     797.4     465.0     1,935.0
 ENERGY                308.5     352.4     332.5     176.2     1,169.6

AES

U.S. energy company AES.N in 2006 launched construction of a $1.4 billion coal-fired power plant, the largest investment in Bulgaria since the fall of communism in 1989. AES is also building a 270 million euro wind park.

ENEL

In 2003, Italian utility ENEI.MI started a 700 million overhaul of Bulgaria’s thermal power plant Maritsa East Three, which was completed earlier this year. Enel holds a 73 percent stake in the coal-fired plant.

AURUBIS

Germany’s copper producer NAFG.DE has invested 80 million euros since 2006 in its plant in the town of Pirdop, the second biggest in the group.

The smelter was initially owned by Belgium’s Cumerio which was taken over by Norddeutsche Affinerie in 2008. The new group then changed its name to Aurubis to reflect the expansion.

GREAT WALL

China’s largest sport utility vehicle maker, Great Wall Motor Co, has started building an 80 million euro car
plant in a joint venture with Bulgaria’s Litex.

Litex said investment in the project, which will employ some 1,300 people, would reach a total of 300 million euros at a later stage.

KBC

In 2007, Belgian banking and insurance group KBC KBC.BR acquired 75 percent of Bulgaria’s EIBank, ninth-largest bank in
terms of assets in the country at the time, in a 295 million euro deal.

ALLIED IRISH BANKS

Allied Irish Banks ALBK.I bought 49.99 percent of specialist business lender Bulgarian-American Credit Bank (BACB)
for 216 million euros in 2008.

OMAN FUND

The Oman State General Reserve Fund, which is one of the key investment institutions of the government of the Sultan of Oman, paid 185.4 million levs for a 30 percent stake in Bulgaria’s Corporate Commercial Bank earlier this year.