Equest raises €32m for Bulgarian deals

Equest Partners, the London-based private equity firm, has raised €32 million for investment in Bulgaria through a vehicle listed on the Irish Stock Exchange.

London-based Equest Partners has raised €32 million ($39 million) for investment in Bulgaria through Equest Investment Bulgaria Limited, an investment company quoted on the Irish Stock Exchange.

Equest managing partner Petri Karjalainen said institutional investors based in the UK, Switzerland, Austria, Sweden, Germany, Ireland and the US committed 80 percent of the capital. They included Commerzbank London and Griffin Capital, the investment management company, both of which have appointed representatives to the Equest investment committee.

Karjalainen said Equest may seek to increase its capital to between €40 million and €50 million over the coming months. “We think €32 million is a good number for Bulgaria, which is still an emerging market. But now we have become active investors, we are comfortable that it can be deployed and may seek to raise the total to €50 million.” He said any further fundraising would focus on US investors, which have a “strong interest” in Bulgaria.

Equest recently made its first two investments in the country: Pelican Retail Holdings, comprising more than 6,000 square metres of retail premises in Sofia to be converted for food and non-food retailing activities; and Avto Union, a consolidation play in the car services and distribution sector. It will target growth sectors such as retail, financial services, telecommunications, consumer goods and property.

Karjalainen said the main purpose of the fund was to provide investors with access to a country demonstrating strong growth ahead of its planned accession to the European Union in 2007. Bulgaria’s GDP is currently growing at more than five percent per annum, its currency is pegged to the euro, and it has a 2.5 percent interest rate.

Equest was established in 2001 to manage and advise investments in emerging markets. It is headed in the UK by Karjalainen, who spent 11 years with Williams de Broe as managing director for emerging markets, and Kari Haataja, who spent seven years at the European Bank for Reconstruction and Development with responsibility for investments in Russia and Central Europe. The firm also has a Sofia office headed by George Krumov, who spent more than seven years at BP in various management roles.

Karjalainen said Equest plans to launch more funds in Central and Eastern Europe, as well as in specialist sectors such as energy, resources and property.