EBRD commits €25 million to Avallon MBO Fund III for central and eastern European equities

By Axel  Reiserer

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New fund will support long-term growth of small businesses, primarily in Poland

  • EBRD commits €25 million to private equity fund Avallon MBO Fund III
  • Focus on small and medium-sized enterprises and small mid-cap companies
  • Alternative sources to increase availability of funds

The EBRD is supporting the development of alternative funding sources in Poland by committing €25 million in favour of the private equity fund Avallon MBO Fund III. The new fund will increase the availability of private equity financing, which is crucial for the development of private and entrepreneurial initiatives as well as for supporting companies’ growth.

This is Avallon’s third institutional-quality fund backed by the EBRD, with each fund increasing in size while maintaining its core focus on small and medium-sized enterprises and small mid-cap companies, predominantly in Poland.

The EBRD is a notable investor in the Polish private equity market and sees its further development as a way to provide scarce equity capital to local companies, ultimately increasing the overall competitiveness of portfolio companies, developing alternative funding sources and strengthening the resilience of the financial sector.

“The fundraising conditions are challenging even for established managers in advanced economies,” said the EBRD’s Director for Equity Funds, Anne Fossemalle. “The EBRD’s support is instrumental in helping fund managers to mobilise institutional-quality investors and establish private equity funds, which will be needed even more in these tumultuous times.”

Avallon is seeking to raise a fund of €130 million. It had its first close and finalised its first investment in Clovin – a family-owned company in Czyżew, founded in 1995 and focused on the production of professional powdered cleaning products for the industrial segment, including hospitals.

Avallon was established in 2001 and is based in Łódź, Poland’s third-largest city. It was a market pioneer in management buy-out/buy-in transactions in Poland and has since increased its brand recognition among company owners and management through its investment activity. It continues to be engaged in value creation, leveraging its prior experience, to build well-governed firms. Avallon promotes private and entrepreneurial initiatives and supports the development of companies’ operational capacity and growth.

“The EBRD’s investment will support the generational transition that is currently underway in Poland, fostering ownership among company management,” said Grzegorz Zieliński, EBRD Regional Director for Central Europe.

The EBRD has been investing in private equity and venture capital funds since 1992 and has provided €4.4 billion to around 200 funds, with fund capital of more than €27.1 billion. These funds have financed more than 1,700 companies across the regions where the EBRD invests.

Since the beginning of its operations in Poland, the EBRD has invested almost €10.5 billion in 434 projects in the country. Diversifying funding sources for the corporate sector, supporting the green economy and developing the capital market are among the Bank’s priorities in Poland.

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