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EBRD commits up to US$ 50 million in new Baring Vostok Fund for Russia and Ukraine
The European Bank for Reconstruction and Development (EBRD) plans to invest up to US$ 50 million in a new fund that will make equity investments in medium-sized companies principally in Russia and Ukraine. The Baring Vostok Private Equity Fund, which is expected to raise up to US$ 250 million, will focus on the oil and gas, telecom, high technology, forestry and consumer-product sectors.
By investing in the Baring Vostok Fund, the EBRD hopes to build on the success of the First NIS Regional Fund, in which the Bank is also an investor. Launched in 1994 with commitments of US$160 million, the First NIS Fund has outperformed other long-term equity funds in the former Soviet Union and has participated in leading local companies, including Vimpelcom and Golden Telecom. The new Fund will use the skills and experience of the First NIS Fund's investment advisor, Moscow-based Baring Vostok Capital Partners.
"Private equity is a high priority for the EBRD in Russia and Ukraine," said Kurt Geiger, Director of Financial Institutions at the Bank. "Hands-on fund managers, such as Baring Vostok Capital Partners, are crucial to our aim of improving the financial performance and corporate governance of local private companies."
Mr Geiger added: "Private equity funds are also a particularly effective way to increase the impact of our investments, mobilising private sector funding as well as our own. The EBRD's commitment should therefore help create important new opportunities for companies in the region."
At initial closing earlier this month, the Baring Vostok Fund had raised US$ 65 million (€72 million), and aims to raise US$ 250 million (€279 million) in total from private-sector investors in the United States and Europe by September 2001. The EBRD expects to invest 35 per cent of the total value of the Fund, or up to US$ 50 million (€56 million).
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