EBRD and European Union support launch of private equity fund in Armenia

By Loretta  Martikian

EBRD launches new Strategy for Armenia

  • Amber Capital EU-Armenia SME Fund to promote the development of small and medium-sized enterprises (SMEs) in Armenia through equity investments
  • The EBRD, with the support of the European Union, provides commitments of up to €16 million million
  • The fund will provide financing to strengthen the competitiveness of Armenian SMEs

The European Union (EU) and the European Bank for Reconstruction and Development (EBRD) have provided up to €16 million to support the launch of the Amber Capital EU-Armenia SME Fund, a private equity fund seeking to raise a total of €70 million for investment in SMEs in Armenia.

The Fund will be managed by Amber Capital, an international investment firm with an established office and a team of professionals in Armenia, and will seek to build a diversified investment portfolio across sectors including renewable energy, agriculture, manufacturing, tourism, information technology and logistics.

Through its equity investments, the Fund will seek to enhance the competitiveness of beneficiary SMEs, including through improving corporate governance and transparency and helping them to internationalise.

The facility also includes capacity-building consultancy offered to local enterprises, through the EU-supported EBRD Advice for Small Businesses programme, to enhance the investment readiness of the SMEs and promote their competitiveness.

 “The EU is a key partner for economic development and prosperity in Armenia”, said Katarina Mathernova, Deputy Director-General for Neighbourhood Policy and Enlargement Negotiations at the European Commission. “The EU is proud to be adding a new innovative tool to unleash the potential for SME development in Armenia, creating jobs and providing concrete benefits to the people. We are confident that the EU-Armenia SME Equity Fund will support the growth and competitiveness of the Armenian economy, attract foreign direct investment and help further develop innovation based on the talents of Armenians.”

“The Armenian government has started building an innovative and inclusive economy, where SMEs will play an important role. In this period of fundamental changes, the newly established EU-Armenia SME Equity Fund will contribute significantly to the economic advancement of the country and will create new opportunities for entrepreneurs”, said Tigran Avinyan, Deputy Prime Minister of Armenia.

 “Armenia has a long history of entrepreneurship and huge entrepreneurial potential. We are excited to support the launch of this private equity fund that will help to diversify the financing opportunities available to SMEs. This project will also help to improve the investment climate and overall diversification of the economy. We are grateful to our long-standing partner, the EU, for the strong support of this project”, said Matteo Patrone, EBRD Managing Director, Eastern Europe and the Caucasus.

“We are very excited to be a part of this initiative, pioneering the concept of institutional private equity in Armenia. The Fund will bring together the best of the two worlds: the highest quality investor base and strategically important corporate clients to create strong and long-lasting partnerships. We aim to become a catalyst for change with the introduction of the best corporate governance standards, technology transfer and the development of capital markets”, said Anush Simonyan, Chief Executive Office of Amber Capital Armenia.

The EU is the biggest provider of financial support and a key reform partner in Armenia that provides, on average, €1 million per week to contribute to stronger governance, a stronger economy, stronger connectivity and people-to-people contacts. With annual allocations of €40 million in grants, its current substantial portfolio focuses on supporting the reform agenda of the government, private-sector development, education and regional development. In addition, since 2014 more than €1 billion in the form of blended loans and grants has been invested in the energy, agriculture and transport sectors.

The EBRD is the leading institutional investor in Armenia, active in all sectors of the economy.  Since the start of its operations in Armenia in 1992, the EBRD has invested €1.36 billion in 178 projects in the country’s financial, corporate, infrastructure and energy sectors, with 90 per cent of investments in the private sector.