Copernicus to raise Poland’s debut FoF

The Polish private equity firm is planning to raise up to $150m for Poland’s first fund of funds.

( Polish private equity firm Copernicus Capital Partners announced the launch of the country’s first fund-of-funds.


The fund-of-funds, which will have an eight-to-ten-year time horizon, is seeking to raise between PLN300m and PLN600m ($76.6m and $153.2m), according to the firm. Financing will come primarily from institutional investors in Poland, in particular Polish pension funds, the firm said. However, Polish pension funds face legislative restrictions on the amount of money they can invest in private equity.


Investments, to begin next year, will range between $5.11m and $15.32m. The fund-of-funds will operate in the Central and Eastern European region, though it will target primarily established, medium-sized private equity buyout funds with assets under management between E30m and E100m.


Currently, Polish pension funds are limited to invest no more than five per cent of assets in a closed-end investment fund. But most private equity funds are registered outside of Poland and therefore inaccessible to Polish pension funds. The framework could change as soon as this year now that the Polish parliament is working on a new Investment Funds Act that would ease some of the restrictions.


According to news reports, many Polish pension fund managers are not enthusiastic about Copernicus’ venture. Pension fund managers are wary to commit such a large chunk of money for such a long time with so little liquidity. Copernicus said it does not expect prospective investors to commit more than one per cent of their assets.


The firm plans to circumvent the liquidity issue by having the fund issue investment certificates on the private market, to be then introduced to public trade and listed on the Warsaw Stock Exchange.


Should Copernicus’ experiment prove successful, the firm said it would discontinue participation in its other funds. Currently, Copernicus manages approximately $36m in the Poland Investment Fund and the Central Poland Fund, both of which are due for harvesting in a couple years.


Private equity funds in the Central and Eastern European region currently have E4.8bn in assets under management, according to EVCA. The Polish private equity market, which has 40 funds, is 46 per cent expansion stage investments, 29 per cent “replacement capital,” and 17 per cent buyouts.


Copernicus Capital Partners is part of the Copernicus Group, which also has an investment banking arm called Copernicus Finance. The group manages approximately $200m in assets and specialises in the markets of what it calls “Emerging Europe.”