Delta Capital has launched a new fund, Delta Russia Fund, which aims to raise $100m by late summer this year. Approximately half of the fund has already been raised.
Investors in the fund are expected to be split 50/50 between the US and Europe. It will focus on investments in TMT, consumer products distribution and financial services. Delta sees opportunities particularly in the distribution market which it believes remains under-developed in Russia. To help the sector along, the fund will consider investing seed capital or co-investing in technology start-ups.
A source at Delta Capital spoke to PEO about how levels of investor confidence in the region have been buoyed by changes in legislation: “The government has introduced a number of reforms to tax and introduced a more stable regulatory framework over the past twelve months. People who have an awareness of Russia realise that it is a good time to invest. For people with less awareness it is hard.”
Delta has good reason to claim that it has that awareness. The firm has gained experience managing the US Russia Investment Fund which was launched in 1995 to help promote the development of a market economy in Russia, and has invested approximately $200m in companies operating in Russia. Whilst initally funded by the US Congress through grants from the United States Agency for International Development (USAID), the US Russia Fund had always been envisaged to allow its managers to move on to running funds entirely for private sector investors.
A similar approach was taken in Poland, where local private equity firm Enterprise Investors has moved forward from its origins as a manager of the Polish American Enterprise Fund, also supported by Congress. In October last year, Enterprise Investors announced a $200m closing towards what will be its fourth fund already, Polish Enterprise Fund IV, with an overall target of $300m.