Russo-Italian maiden fund slates first investment

MIR Capital, a buyout fund jointly created last year by Gazprombank and Intesa Sanpaolo, aims to deploy €300m within the next five years.

MIR Capital, a private equity fund backed by Russia's and Italy’s largest banks, has acquired a minority stake in Packer Service Group. 

Created in 2006, Moscow-based Packer provides high-tech services to large oil and gas producers. The capital deployed by MIR Capital, the amount of which was not disclosed, is to be used to fund product development and new acquisitions. 

The investment is the first made by the $300 million vehicle, funded last year by Gazprombank and Intesa Sanpaolo to support Russian and Italian SMEs. 

“Both banks share a similar view on making investments: we aim to acquire minority stakes, with a limited level of debt, in order to help companies to grow and to develop their presence in both markets,” said Fabio Cane, head of private equity at Intesa Sanpaolo. 

Aside from its well-known national champions, the Italian economy is made up of thousands of smaller, international companies, he explained. “They post sales of between €250 million and €2 billion a year, and have a very strong propensity to export and invest outside Italy.”

We are thinking of replicating this model in other important markets, like the Far East, Latin America, the Middle East and eventually India.

Fabio Cane

Russia had many companies of a similar profile, added Alexander Sapozhnikov, head of corporate finance at Gazprombank. “There are many Russian companies already growing to a certain level, and which are ready to expand abroad. Together with our colleagues from Intesa Sanpaolo, we can help these companies with their international expansion.”

The fund, which has an investment period of five years, is sector agnostic, Cane explained. “For example Intesa Sanpaolo invested in a producer of apparel and bags in Italy a few months ago. We proposed this investment to Gazprombank, and thanks to the joint-venture and their connection with molls and the retailers, the company now [counts] two shops in Moscow – with a program to develop 100 shops in the region.”  

Although based in Luxembourg, the fund is managed by both banks’ operating staff in Italy and in Russia. It is funded in equal measures by both institutions, and doesn’t yet have a dedicated team. 

Its remit, so far limited to Italy and Russia, could expand in the future, Cane said. Whilst a first step would be to look at investment opportunities in the CIS, the banks’ ambition is to form further partnerships with leading financial institutions in a number of emerging markets. 

“We are thinking of replicating this model in other important markets, like the Far East, Latin America, the Middle East and eventually India.” That would entail seeking like-minded partners in different geographical areas, he said. 

Both were confident the fund would seal other deals this year, which they said would likely be within the €20 million to €40 million range. 

“We are working on other investments, and looking at partnering with other funds. Hopefully some of these deals will be announced this week.”