Delta Private Equity Partners is raising a $500 million fund to invest in small- and mid-sized Russian growth companies, according to market sources.
The new fund will follow the same investment strategy as its predecessor, making equity investments of between $5 million and $10 million in companies for an average period of three to five years.
The fund will also stick to its predecessor’s sector focus of financial services, consumer goods, media, telecoms and certain technology investments. It will avoid investments in real estate, oil and gas, pure technology and any asset which could be considered of strategic political importance.
We never had the luxury of a lot of leverage.
Delta has been investing in Russia since 1995, when it began deploying the US Russia Investment Fund, a US Government-backed vehicle created to stimulate private business. Over the 10-year course of the fund, it invested more than $320 million.
Russia: money in the mattress
Following the deployment of the US Russia Investment Fund, Delta raised the $120 million Delta Russia Fund in 2004, with a mix of institutional and individual investors.
The two previous funds combined have generated a 210 percent realised internal rate of return, according to the source.
Delta declined to comment.
Speaking at the PEI Media/EMPEA Emerging Markets Private Equity Forum earlier this week, Delta chairman and chief executive officer Patricia Cloherty said that the emerging Russian private equity market was well-positioned to weather the financial crisis, citing a lack of both consumer and corporate debt. “We never had the luxury of a lot of leverage. Russia is still a money in the mattress economy,” she said.