Quadriga Capital, the Frankfurt-based midmarket firm, is raising $120 million (€102 million) for its second Russia-focused fund, Quadriga Capital Russia Private Equity Fund II. Max Römer, the firm’s managing partner, told PEO that the firm had already raised $90 million and expected to complete the fundraising next month.
The new fund will pursue a similar investment strategy to Quadriga’s previous Russian fund, which since 1995 has invested $80 million in 16 midmarket companies in the St Petersburg, Moscow and Nizhni Novgorod regions. The fund has returned a money multiple of 2.5 to its investors.
Fund II has so far received investments from bodies including the European Bank for Reconstruction and Development (EBRD), the World Bank, the German investment and development organisation DEG, and Vienna’s Investkredit. It has also begun investing by buying a portfolio of Russian companies including a manufacturer of plastic containers, a chain of car servicing workshops, a tour operator and a software development company.
Quadriga was selected by a G7 programme to invest in privatized Russian companies in 1995, explains Römer: “When Russia collapsed at the beginning of the 1990s, there was a question of how the EBRD could get money into the country.”
The bank decided to work through local banks to invest rebuild smaller companies and make investments in large corporations from its own balance sheet. For midmarket companies, it decided to provide capital through specialist investors and private equity firms. Quadriga was selected to invest in the St Petersberg region, and later also won the tender for central Russia.
As part of the agreement, the firm’s operating expenses in Russia are paid by the German government.