A group of European investors have launched a private equity fund aimed at investment in small to medium-sized enterprises (SMEs) in Bulgaria and Romania.
The European Bank for Reconstruction and Development (EBRD) and Global Finance, a private equity investment company operating in Southeast Europe, are the fund’s main sponsors. Other investors include Bulgarian Post Bank, Banc Post Romania and the European Commission with E6.5m through the EU/EBRD SME Finance Facility. The fund’s initial capitalisation will be E16.25m, which could be extended to E20m.
The so-called Global Bulgaria and Romania Growth Fund expects to make equity investments with an average size of E800,000 in growth-oriented SMEs, taking both minority and majority stakes.
Managed by Global Finance, the fund is targeting companies with strong management, good potential for growth and which are building strong brand names and distribution networks, while taking strong positions in the local markets. It will also look for companies that are using local resources and are highly competitive within their field.
John Chomel-Doe, head of the EBRD’s office in Bulgaria, said equity funds that support SMEs are crucial in countries like Bulgaria and Romania. A key factor for the growth and vitality of SMEs is access to finance, which the Global Bulgaria and Romania Growth Fund will provide, he added.
Emil Ivanov, general manager at Global Finance Sofia, said: “Global Finance backs business people and entrepreneurs with a proven track record and dedication to their companies, who are able to lead their businesses to top performance.”
Established in Greece in 1991, Global Finance manages over E400m of capital throughout the region. One of the vehicles it oversees is the Black Sea Fund, which makes investments in the Balkans in the $5-10m range. Global Finance also provides its investee companies with follow-on financing capacity and access to an extensive network of relationships, including clients, suppliers, professional advisors and financial institutions.
The EU’s SME Finance Facility was launched in 1999 under the Phare Programme – the main channel for the European Union's financial and technical cooperation with the EU accession countries – together with the EBRD. It aims to encourage institutional development in the financial sector and the growth of SMEs by providing access to loans, leasing and equity finance from local financial intermediaries. The budget earmarked for the Phare Programme in 2000-2006 is about E11bn.