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EBRD focuses on central and eastern Europe’s IT sector
Rila Solutions, an internet and wireless solutions company with operations in Sofia, Bulgaria, is the first business to benefit from a new US$ 30 million (€ 32 million) facility set up by the European Bank for Reconstruction and Development (EBRD) to support internet and high-technology firms in central and eastern Europe. The EBRD will make a US$ 3 million (€ 3.2 million) equity investment in Rila Solutions, providing the rapidly growing company with essential early-stage capital. Rila Solutions has raised a total of US$ 9 million (€ 9.6 million) from the EBRD and other investors, including ARGUS Capital Partners, a private equity fund, in this round of financing.
"Over the last 12 months the e-commerce sector in central and eastern Europe has become one of the most rapidly growing and dynamic sectors," said Jean Lemierre, President of the EBRD. "This is a fast-moving sector demanding a new method of financing."
Aiming to provide equity finance during the start-up phase for companies, the framework facility is structured to allow the EBRD to make small investments quickly. By keeping investments small, the Bank will be able to build up a diversified portfolio, thereby minimising the risk of exposing itself to just one or two large investments. Individual projects are expected to be co-financed by the company’s founders and other investors.
Rila Solutions was founded in 1998 by George Soros and currently has over 125 internet and wireless consultants. The company develops leading-edge e-commerce solutions for clients in the United States and Europe, which include Microsoft, Intuit, MyAlert and Essential Markets.
Mr Lemierre said: "The financing framework provides promising business managers with quick access to stable, long-term finance while allowing us to develop this growing sector from the "grass roots". Moreover, we have experience on our side. We can learn from the ups and downs of various Western business models."
The framework, which is part of a more comprehensive strategy by the EBRD to promote growth in the region’s IT sector, involves investing directly in private, small and medium-sized companies that derive a significant part of their revenue from internet-related activities. These include the following areas:
- software and e-services businesses
- business-to-business e-commerce
- specialised portals with a clear revenue model, and
- internet service providers/portals in the intermediate/early-stage markets.
It will also make investments in intermediaries, such as small venture capital funds with a focus on technology, investment holding companies and incubators.
"We are pleased to have the EBRD as an investor and as a partner," said Christopher C. Hansen, Chief Executive of Rila Solutions. "The EBRD’s investment enables Rila to grow as a leading international internet and wireless consulting firm."
Through its equity investment in Rila Solutions, the EBRD expects to support the growth of a well-managed business in a flourishing sector of the Bulgarian economy. Since 1999, Rila has been working for mainly US-based companies, but has more recently added clients in France, Germany, Spain and Portugal. The EBRD expects Rila to set an example to other companies in the internet and IT sectors, not just in Bulgaria but across the whole region.
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