A new Greater Europe Fund (GEF) has been launched by Vienna’s Invest Equity with an initial commitment of €20 million. The fund will target companies in EU accession countries as well as Austria.
A total of €20 million ($25 million) has so far been committed by three organisations: Austrian banks InvestKredit and Osterreichische Volksbanken, and Germany’s KfW Development Bank. Invest Equity managing partner Martin Prohazka said the fund is targeting a first closing in the summer of up to €50 million. It will then seek to bring on board institutions it does not have an existing relationship with (including foreign investors) prior to a final closing in mid-2005. The firm does not yet have a target amount for the final closing.
GEF will primarily acquire mid-market companies in Austria and Southern Germany as well as co-investing in the Czech Republic, Slovakia, Hungary and Slovenia alongside local private equity firms.
Prohazka says the fund will make around 60 percent of its investments in Austria and Germany and up to 40 percent in those countries due to join the EU in May 2004. But he adds that the level of exposure to the accession zone is higher than this implies: “Investments in medium to large-sized Austrian companies give exposure to EU accession countries anyway, because many have production facilities and distribution outlets there.”
In an interview, Prohazka also hinted at secondary opportunities in accession countries. “When Westernisation began there ten years ago, private equity funds were sponsored by development organisations such as the IFC and EBRD. They are now reaching the end of their lifetimes and there may be some opportunities there,” he said.
Invest Equity’s previous IEB fund closed on €49 million in 1999. Earlier this week, portfolio company Chemson, a PVC and glass additives producer, acquired German market rival ALLSTAB Chemicals.