Portuguese government backs fund of funds

The €111.3m fund, backed by the EU and the Portuguese government, aims to build Portugal’s private equity and venture industries in support of small and medium sized enterprises.

The European Investment Fund (EIF), the Portuguese government and Portuguese financial institutions are jointly launching a €111.3 million ($175 million) fund of funds and co-investment programme, The Portugal Venture Capital Initiative.

The aim of the fund of funds is to catalyse the development of the private equity and venture capital industries in Portugal in order to support small and medium sized enterprises (SMEs). The fund will support local fund managers as well as seek to attract investment from regional and international players.

EIF, the European Union body focussed on financing SMEs throughout the EU, will serve as advisor to the fund. It has invested €4.4 billion in approximately 280 private equity and venture capital funds and has provided €11.4 billion in guarantees to those financing SMEs.

Investors in addition to EIF are: the Portuguese government, Portuguese foundation the Calouste Gulbenkian Foundation, and Portuguese financial institutions Banco BPI, Banco Espirito Santo, Millennium bcp, Caixa Geral de Depositos, Barclays Bank PLC, Montepio and Banif Banco Santander Totta.

There are a number of government-backed fund of funds worldwide. The Canadian province of British Columbia launched BC Renaissance Capital Fund, a $90 million venture capital fund of funds, in April. The Russian Venture Company is a RUB30 billion ($1.2billion; €816 million) government-backed venture capital fund of funds launched in 2006. TANEO, a fund of fund established in association with the Greek government, closed its debut fund on €150m in 2003.

In the US, various state governments back funds of funds designed to support local economic growth.