Helsinki-headquartered CapMan has reached a €97 million first close for its CapMan Russia II fund, which will invest in small and mid-sized business in Russia, according to a statement by the firm.
The fund has so far attracted 10 investors from the US and Europe. Half of the investors are existing LPs and half of them are new, Jerome Bouix, a senior partner and head of business development and investor relations at CapMan, told Private Equity International.
The new investors came from the Nordic region and the rest of Europe, he said. “Our fund has an experienced local team backed by a western platform like CapMan. This combination is perceived as a safe way to enter the Russian market,” he added.
One of CapMan's repeat investors is the European Bank for Reconstruction and Development (EBRD) which has committed €20 million initially although that could rise to €50 million should the vehicle continue to grow.
As a GP co-investment, CapMan committed €3 million to the fund as well, approximately 3 percent of the total commitments.
The CapMan Russia II fund will invest in fast-growing sectors, such as consumer goods and healthcare, and in growth regions beyond Moscow and St. Petersburg.
While the firm admitted Russia remains a niche strategy for many LPs, the market has great potential, Bouix indicated. “The Russian private equity industry is in the same stage as private equity in the Nordics in the 90s. It is not a buyout market yet like Western Europe.” Most of the deals are growth investments, he added. “Because not much or no leverage is used at deal level, the risk levels are pretty limited. Most regions and sectors are growing and our investment strategy is quite opportune to benefit from this growth,” he said.
Bouix declined to disclose the target for CapMan Russia II, but according to Private Equity International's Research & Analytics division, the firm is raising €175 million. The firm’s previous Russia fund, the €118 million CapMan Russia I, was raised in 2008. Some of the investors in this fund include: EBRD, Gimv, International Finance Corporation (IFC), Finish innovation fund SITRA and Varma Mutual Pension Insurance Company.