EBRD invests €40 million to support businesses in central and eastern Europe

• EBRD commits €40 million to Avallon MBO Fund IV
• Fund targets €220 million, with a maximum size of €260 million
• Investment will expand access to long-term equity capital for SMEs and small mid-caps

The European Bank for Reconstruction and Development (EBRD) has invested up to €40 million in Avallon MBO Fund IV, a private equity fund focused on supporting small and medium-sized enterprises (SMEs) and small mid-cap companies in Poland and elsewhere in central and eastern Europe.

The investment will promote private enterprise, encourage management to take ownership stakes in their companies and help those businesses to build operational capacity, innovate and grow.

Avallon MBO Fund IV, managed by Avallon, is targeting total commitments of €220 million, with a maximum size of €260 million. At least 70 per cent of the fund's commitments will be invested in Poland, with up to 30 per cent allocated elsewhere in central and eastern Europe, namely Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Romania, the Slovak Republic and Slovenia. The fund will build a diversified portfolio of equity and quasi-equity investments in SMEs and small mid-caps, providing long-term capital to help businesses scale up and become more competitive.

The EBRD's participation will play a key role in mobilising additional investment and strengthening fundraising efforts in a market where access to long-term risk capital remains limited. Private equity fundraising across central and eastern Europe has faced challenges in recent years, affecting the availability of growth financing for smaller businesses.

Andreea Moraru, Managing Director for Central Europe and the Baltic States at the EBRD, said: "Small and medium-sized companies are a vital source of innovation, employment and economic growth. Through our investment in Avallon MBO Fund IV, we will help ambitious businesses strengthen their market position, pursue new opportunities and contribute to sustainable economic development across the region."

Dirk Werner, Managing Director for Equity at the EBRD, added: “With fundraising conditions remaining difficult even for established managers, the EBRD's support is instrumental in bringing in institutional-quality investors and strengthening the development of private equity funds, which are increasingly needed in today's environment.”

Tomasz Stamirowski, Managing Partner of Avallon, said: “The EBRD has been a key investor in four consecutive funds. We value both our long-standing relationship and the enormous role the EBRD plays in the success of fundraising in central and eastern Europe.”

Avallon is a Poland-based private equity manager with a focus on investing in SMEs and supporting their development across central and eastern Europe. For over 25 years, Avallon has worked with management teams to support companies through succession, expansion, professionalisation and market consolidation.

The EBRD is one of the leading institutional investors in Poland, having invested more than €17 billion in the country across more than 610 projects to date. It finances companies at every stage of growth through debt, equity and equity-like instruments both directly and indirectly.