Fund for Rural Economic Development in Armenia [FREDA] has been functioning since September, 2009. It was established at the initiative of the Armenian government and the International Fund for Agricultural Development (IFAD). FREDA is the first investment Fund in Armenia and it is meant to assist agribusiness spheres, which contribute to development of rural areas. Executive Director of FREDA Tigran Khanikyan spoke of the results of the Fund’s activity in 2010 and the nearest plans in an interview to Mediamax Agency and Banks.am portal.  

- Speaking at the session of FREDA Board of Trustees, Chairman of the Board, Prime Minister of Armenia Tigran Sargsian expressed hope that the year of 2011 would become a breakthrough year for the Fund, and the latter would have a significant volume of investments this year. What programs were realized by the Fund in 2010 and what perquisites are there to make the year of 2011 a really breakthrough year?

- In 2010, we funded “Aquatechautomatics” Company, which functions in the sphere of fish breeding, “Pyunik” poultry factory and Meghri cannery.

At the end of last year we approved two new programs and submitted two more to the discussion of the investment committee. The applications for financing “Agrolog” cold storage and “365 Wines” wine producer have been approved. Both companies will receive our assistance, aiming at expanding production.

The application of “Levon” OJSC is in process of discussion now at the investment committee. “Levon” OJSC was previously known as Hoktemberyan cannery. The company intends to modernize its equipment and expand business. Its application, I believe, will be approved in January-February.

Another application was presented by “Cheese Stone” producer of dairy products and cheese. The company needs our investment to establish milk purchasing stations in the regions and reequipping the production line.

I should note that all three companies, which have already received our funding, completed the year of 2010 with profit, and secured export totaling USD 1.7mln.

- FREDA realizes its funding assistance through entering the composition of the companies’ shareholders. What is the average size of FREDA’s share participation in the enterprises financed by the fund, and what is the total volume of the fund’s investments in the mentioned 7 enterprises?

- Our participation in the companies’ capital makes on average 25-35%, and the total volume of investments in the mentioned 7 companies makes AMD 1.1bln (USD 3.05mln).

- The year of 2010 was quite unfavorable for agriculture. How did that fact influence the fund’s activity?

- The unfavorable year had its direct effect on production volumes of the companies financed by us. The scarcity of fruits and vegetables and the relatively high prices of purchases led to the growth of the production’s prime cost.

- FREDA was established with the capital of USD 5mln, USD 3mln of which will be soon placed. What sources does the fund intend to use to replenish the capital?

- Already in January-February, we will have spent over half of the initial capital, and we will have AMD 700-750mln left. The search for additional financing will become one of the main priority directions for us in 2011, and the preparatory works in this direction will start already in this quarter. We plan to attract means from institutional investors, or, for instance, funds for development of Scandinavian countries. We intend to at least double our capital.

- What format does FREDA use to familiarize the representatives of agribusiness with its investment tools?

- In 2010, we held meetings with the association of fish breeders, as well as unions of exports and cheese producers.

Besides, jointly with “Financial-Banking College” Fund, we are now elaborating a special manual, where our investment tools will be presented in detail. The manual will be published in 2011, and we plan to present it in all regions of the country.