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Hungarian Capital Fund announces first closing: new Hungarian restructuring fund
The Hungarian Capital Fund (HCF), a new fund created to satisfy the increasing demand for equity to restructure companies in Hungary, is scheduled to have its first closing at the end of the month. The Fund is being formed to make private investments with controlling interests in Hungary. The Fund's total value will be up to US$ 60 million. An additional closing will take place within a year.
The Fund will be managed by Hungarian Capital Fund Limited, jointly owned by CVC Fund Managers Limited, a wholly owned subsidiary of CVC Capital Partners Europe Limited (CVC), and Bankár Capital Investment and Economic Advisory Limited (Bankár Ltd). CVC Fund Managers Limited will act as Fund Adviser and Bankár Ltd will act as Investment Adviser.
The European Bank for Reconstruction and Development (EBRD) is making an equity investment of US$ 10 million in the Fund. Citicorp and other UK and Hungarian based institutions are also participating. These will include Sun Life Assurance and, subject to exchange consents, Commercial and Credit Bank Ltd, Budapest.
Jacques de Larosière, President of the EBRD, said: "This new fund has a specific objective of restructuring Hungarian companies. It aims to create value by transforming loss-making or poorly performing ventures into new ones that will either attract strategic investors or become eligible for listings on the Budapest Stock Exchange. Hungary is particularly suited to such a fund because it has been enforcing a bankruptcy law for several years."
The EBRD is a co-sponsor and investor in the Hungarian Capital Fund with CVC, an independently owned investment adviser that serves as Citicorp's exclusive investment adviser for all its European venture capital investments, and Bankár Ltd, a Hungarian corporate finance and financial advisory group.
The Fund will buy, restructure, upgrade and sell Hungarian companies in financial difficulties or already in liquidation, as well as companies recently privatised or in the process of privatisation. It will target investments in middle-sized ventures. The Fund will seek to obtain a direct or indirect controlling interest in the investee companies and, through Bankár Ltd, will often provide new management to the target companies in order to implement restructuring measures.
The Fund will aim to exit after a one- to three- year period by selling the restructured companies to foreign or Hungarian strategic investors, or through listings on the Budapest Stock Exchange.
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