Baring Vostok, a Russian private equity firm, has completed fundraising for its fifth fund and its co-investment vehicle. The Baring Vostok Private Euqity Fund V reached its hard cap of $1.15 billion.The figures were released by UBS, which acted as the firm’s sole global placement agent.
Sidecare co-investment vehicle The Supplemental Fund V also raised $350 million of additional commitments from investors. The two funds combined attracted more than $1.5 billion in total, which Baring Vostok claims is the largest amount of private equity capital ever raised in Russia.
Baring Vostok will use its Fund V to invest in mid-market companies in Russia and countries of the former Soviet Union. The investments are expected to concentrate on natural resources and consumer-orientated goods and services. The firm will be mainly targeting businesses with a lack of cash.
The European Bank for Reconstruction and Development (EBRD) committed $75 million to the new funds, it said in a separate statement. The bank has invested in every fund raised by Baring Vostok since the firm was established in 1994. The EBRD has committed nearly $300 million dollars in total to Baring Vostok.
Baring Vostok’s Fund V and Supplemental Fund V follow their predecessor funds, the $1 billion Baring Vostok private Equity Fund IV and $300 million Baring Vostok Fund IV Supplemental Fund, which closed in 2007.
According to the Emerging Markets Private Equity Association, private equity investments in Russia fell from $2.6 billion in 2008 to $217 million in 2009, EBRD said in its statement. In 2010, the total amount of private equity investments in Russia was $1.5 billion and $1.6 billion in 2011, EBRD added. Since 1994, EBRD has invested more than $1 billion in Russian private equity.
Russia remains one of the countries with relatively little private equity activity. It is understood that investors are wary about the countries’ investment environment. A placement agent told Private Equity International in August: “Investors have been wary about corruption, corporate governance and political interference. They understand there are some very good opportunities to be had in Russia, but they need to invest with a manager who’s got a clear track record and who’s able to expose them to the upside opportunity but take care of the downside risk.”