Dave Williams, the former chief executive of Alliance Capital, one of the largest investment managers in the US, is betting on the benefits of EU enlargement, with a new private equity fund targeting Eastern Europe.
The fund will be aiming to raise $500m to invest in service and consumer product industries in the region. The project is Williams’ third venture in Eastern Europe, following his acquisition of East Fund Management, a private equity joint venture between Bank Austria and Alliance. Williams later sold East Fund back to its management.
Last year Williams, through his private equity firm White Williams Private Equity Partners, launched the European Accession Fund LP, a $250m fund to invest in Central and Eastern Europe.
Williams argues that Eastern European markets are less risky than most other emerging markets, because they have greater per capita gross domestic product than most of their competitors. “It is safer and it is all because of being stapled to the EU,” he told the Financial Times.
Williams’ foray into Eastern Europe comes as other private equity investors have been aggressive in the region. Private equity firms that have recently been active in Eastern Europe include ING Group’s Baring Private Equity Partners, Argos Capital, Anova, Enterprise Investors and Dresdner Kleinwort Capital.
William Watson, partner at Baring Private Equity Partners in charge of the Eastern European operation, is unfazed by the prospect of new players entering the market. “There is certainly room in the market for more money. Whether there is room for new teams depends on whether they have a good track record and the experience that existing players in the region already have.”
“Being the largest private equity fund in the region there will always be challenges for Williams. To succeed with that kind of target, you are going to need a couple of anchor investors,” Watson said citing Dresdner Kleinwort Capital, whose $225m Emerging Fund closed in 2001, with $150m from CalPERS, the US public pension fund.