Project detail - Araz Supermarket LLC

Who is our prospective customer?

Araz Supermarket LLC (“Araz”) is one of the biggest food retail networks in Azerbaijan. Araz owns and operates a network of ca. 400 supermarkets under the “Araz” brand as well as stores under the SPAR franchise.

What is our funding objective?

New funding by FMO will provide financing for capex for Araz to (i) build and equip a new FMCG-logistics facility, near Araz’s existing distribution center in Absheron region and (ii) open new stores under the Araz brand, including in rural areas of the country. FMO intends to provide a long-term facility.

Why do we want to fund this investment?

FMO will support the expansion of an important food retail player with strong backward linkages to the local agricultural sector and farming communities and increase logistics efficiency. The transaction contributes to gender equality (a substantial number of Araz employees are women, and the investment contributes to an increase in women's participation in the workforce), decent work & economic development (Araz provides modern working conditions in the less developed regions of Azerbaijan).

What is the Environmental and Social categorization rationale?

E&S categorization is B due to low risks related to the nature of the project and Araz’s business: 1- General supermarket chain operations including distribution center management involving 2- expansion of the distribution center via construction of a new warehouse 3- opening of new stores. These have limited adverse environmental or social risks and/or impacts that are few, generally site-specific, largely reversible, and readily addressed through mitigation measures. Low risks in PS1 (Assessment and Management of Environmental and Social Risks and Impacts), PS2 (Labor and Working Conditions), PS3 (Resource Efficiency and Pollution Prevention), and PS4 (Community Health, Safety and Security) apply and mitigants are in place. As it is the food retail sector, the client sources food items that could eventually come from agriculture supply chains (mainly primary production) containing risks. However, it’s mostly outside the influence of the client as products are not sourced directly from primary producers. Furthermore, the client has a supplier code of conduct in place and carries out an internal supplier screening process.