The EBRD has committed a total of US$ 75 million to two new Russia and CIS-focused private equity funds raised by its long-time partner Baring Vostok. The new funds achieved approximately US$ 1.45 billion in commitments and their investments are expected to primarily focus on consumer-oriented goods and services, as well as natural resources.
These commitments bring the EBRD’s Russia-linked investments in private equity so far this year to US$ 175 million, spread over three projects. Total EBRD investments in Russian private equity since 1994, including these deals, amount to over USD 1 billion. Russia accounts for nearly 30 percent of the EBRD’s overall private equity portfolio.
The new Baring Vostok funds will target firms operating in Russia, Kazakhstan and Ukraine, as well as other CIS countries and Mongolia, including the less developed countries of the region and less penetrated parts of Russia.
The Bank has invested in every fund raised by BVCP since its debut in 1994. Including today’s deal, EBRD commitments to Baring Vostok funds total nearly US$ 300 million.
Other private equity projects signed by the EBRD earlier this year include a commitment last February of US$ 50 million to a fund launched by United Capital Partners. The Bank also became a cornerstone investor in the Elbrus Capital II fund with a USD 50 million commitment in August.
These new EBRD investments reaffirm the Bank’s confidence in the role private equity can play in underpinning economic growth and highlights the Bank’s support for the sector despite a challenging fund-raising environment, said the EBRD’s Director for Private Equity, Anne Fossemalle.
According to the Emerging Markets Private Equity Association, private equity investments in Russia fell from US$ 2.6 billion in 2008 to US$ 217 million in 2009 before recovering to US$ 1.5 billion in 2010. In 2011, private equity investments edged up to US$ 1.6 billion. However, Russia remains one of the economies least penetrated by institutional private equity capital.