UFG seals Ukrainian broadband deal, advances second fund

The Russian investment firm says slow regional public markets are driving an increasing flow of private equity opportunities.

The private equity arm of Russian investor UFG Asset Management has made its first Ukrainian investment, paying an undisclosed sum for a 51 percent stake in Industrial Media Network.

The investment in the company, which provides broadband internet in Kiev under the IPNet brand, was made from UFG Private Equity Fund I.

The deal follows the first close for UFG’s second private equity vehicle, UFG Private Equity Fund II, at the end of June. The target for the new fund is $500 million (€323 million) with a hard cap of $700 million, and the firm has pencilled the final closing for the end of this year.

The second fund will see UFG pursuing deals in the $25 million to $75 million bracket, a slight increase from Fund I. Investors in Fund II include the European Bank for Reconstruction and Development. 

We see an ever increasing flow of potential deals

UFG spokesperson

UFG targets investments predominantly in the Russian Federation. The firm has had no difficulty putting the $250 million of its first fund to work following its November 2005 launch, a UFG spokesperson told PEO.

“We see an ever increasing flow of potential deals, particularly since the growth of the public markets has started to slow down,” she said. “We review between three and five deals every week.”

Fund I has seven current portfolio investments and has completed five exits.

Current portfolio companies include Russian commercial bank Unifin, sunflower oil manufacturer Bakar, and Trans-Siberian Gold, an AIM-listed resources company with Russian gold mining assets.

UFG Asset Management was originally part of Russian investment bank United Financial Group. In 2005 Deutsche Bank bought UFG, but the asset management arm remained in the independent ownership of a group of UFG directors.

Boris Fedorov, the former Russian minister of finance and co-founder of UFG, is the private equity fund’s general partner.

Ukrainian law firm Magisters advised UFG on the Industrial Media Network deal.