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EBRD invests in first equity fund to focus on SMEs in central Poland
To extend wholesale equity and finance to small and medium-sized enterprises (SMEs) in seven vojvodships (counties) in central Poland (Lodz, Piotrkow, Plock, Radom, Sieradz, Skierniewice and Wlocwawek), the European Bank for Reconstruction and Development (EBRD) is committing US$ 10 million (ECU 9.3 million) to the Central Poland Fund LLC, a venture capital fund to be managed by the Lodz Management Group (LMG) and to be sub-advised by Credit Suisse Asset Management (Polska). LMG is a subsidiary of Powszechny Bank Gospodarczy S.A. - Grupa PEKAO S.A. (PBG).
"This regionally focused equity fund will enable the EBRD to facilitate the privatisation process in Poland, which is increasingly being generated on a regional basis" said Kurt Geiger, Co-Director of the EBRD's Financial Institutions team. "As such, it is the EBRD's first fund to focus on a particular region within the country, in order to address the growing demand for equity finance provided on a regional level. It also strengthens the EBRD's cooperation with PBG and the PEKAO Group following joint investments with PBG in the Stabilisation, Restructuring and Privatisation programme (SRP) and in the insurance company Heros S.A."
Slawomir Lachowski, Vice President of PBG, said: "This project will promote the 'indigenous' venture capital and asset management industry in Poland by building on the investment management and restructuring expertise developed at PBG and LMG."
The EBRD facility will invest alongside PBG and the International Finance Corporation (IFC) in the Central Poland Fund, which intends to raise up to US$ 50 million (ECU 46.5 million) in total capital through a subsequent closing. The Fund will provide wholesale equity funding for Polish companies that are too small for the Bank to finance directly, and will provide direct investment in companies which are either private or are being privatised by regional and municipal authorities in the seven vojvodships.
This is the ninth fund targeted at Poland in which the EBRD has invested since its inauguration in 1991 and the third in 1998. The EBRD recently announced its investment in the Pioneer Polish Real Estate Fund S.A., the Bank's first involvement in Polish real estate. As of the end of January 1998, the EBRD had committed ECU 1.03 billion in Poland, almost 10 per cent of the Bank's total commitments to date.
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