Project detail - Araz Supermarket LLC

Who is our customer

Araz Supermarket LLC ("Araz") is one of Azerbaijan's most prominent food retail networks. Araz owns and operates approximately 400 supermarkets under the Araz brand and stores under the SPAR franchise.

What is our funding objective?

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

Why do we fund this investment?

FMO supports the expansion of a vital food retail player with strong backward linkages to the local agricultural sector and farming communities and increases logistics efficiency. The transaction contributes to gender equality, as a substantial number of Araz employees are women, and the investment contributes to increased women's participation in the workforce. It also enhances decent work and economic development, as Araz provides modern working conditions in the less developed regions of Azerbaijan.

What is the Environmental and Social categorization rationale?

The transaction's E&S categorization is B due to relatively low risks related to the nature of the project and Araz's business. Its general supermarket chain operations include distribution center management, which involves the expansion of the distribution center by constructing a new warehouse and opening new stores. These operations have limited adverse environmental or social risks and impacts that are few, generally site-specific, largely reversible, and readily addressed through mitigation measures. Low risks in Performance Standard (PS) 1 (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. In the food retail sector, the client sources food items that could eventually come from agriculture supply chains (mainly primary production), which contain risks. However, it is mostly outside the client's influence as products are not sourced directly from primary producers. Furthermore, the client has a supplier code of conduct and carries out an internal screening process.