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EBRD takes equity in Bulgarian investment company
A Bulgarian investment company, CARESBAC-Bulgaria A.D., which provides financing to private small and medium-sized Bulgarian enterprises, mainly in the agribusiness sector, will receive an equity investment of up to US$ 4 million from the European Bank for Reconstruction and Development (EBRD). The investment agreement was signed today in Sofia.
David Hexter, Director of Financial Institutions at the EBRD, said: "Our equity investment will enable CARESBAC-Bulgaria to support the development of the Bulgarian private sector through investments in small and medium-sized businesses, mainly in agriculture and food processing which have high growth potential. The company will fill a financing gap that exists at the small end of the market as it will target smaller investments that are not covered by other existing investment funds".
CARESBAC-Bulgaria is a small business investment company that provides primarily equity, but also limited quasi-equity and debt financing, to majority Bulgarian-owned SMEs. The company operates on a commercially viable basis and, in addition to much needed capital, it provides technical assistance to client companies in key areas such as marketing, cost accounting and quality control.
Registered as a joint-stock company under Bulgarian law, CARESBAC-Bulgaria's main shareholders are CARESBAC, a US not-for-profit organisation owned by six international assistance organisations, and the Agency for International Assistance, a quasi-governmental not-for-profit agency established in 1990 by the Bulgarian government to receive and distribute foreign aid to Bulgaria. The EBRD equity investment marks the next phase of the company's capitalisation.
CARESBAC has been successful in establishing investment companies focused on SMEs. Following the establishment of similar companies in Poland and Russia, Bulgaria is the third country where such a company has been set up. The EBRD has a US$ 2.5 million investment in CARESBAC-Polska.
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