The European Bank for Reconstruction and Development (EBRD), World Bank Group member IFC, and The Netherlands Development Finance Company (FMO) have joined up with the Asia Debt Management Hong Kong (ADM Capital) to establish a regional fund to invest in midsize companies facing financing difficulties as a result of the financial crisis.
The ADM CEECAT Recovery Fund, targeting Central and Eastern Europe, Central Asia, and Turkey, will help the region recover from the crisis by supporting companies that represent a major source of jobs and significantly contribute to economic development.
The EBRD will invest €60 million, IFC €35 million, and FMO €15 million in the targeted €300 million ADM CEECAT Recovery Fund, which will be managed by ADM Capital. With a total of over €170 million committed so far from the international finance institutions (IFIs), Pension Funds, Endowments and Private Wealth offices, the financing from IFIs has played a key role in securing additional funding from the private sector.
The fund’s investments will focus on rehabilitating operationally strong but financially distressed companies via restructuring, rescheduling, refinancing, debt-equity swaps, liquidity management. It also will fund growth opportunities where alternative sources of capital are not available. The €300 million fund will initially target companies in Kazakhstan, Romania, Turkey, and Ukraine with loans and equity investments of between €10-30 million.
Robert Appleby, one of the founding partners of ADM Capital said, “The fallout of the recent financial crisis in this region has created an environment where ADM Capital’s style of investing can flourish. Many of the issues faced by companies operating in the CEECAT region have strong parallels with issues faced by companies in Asia post the 1998 crisis.”
“The EBRD’s investment in the fund is a commercial response to the growing number and volume of distressed assets and nonperforming loans in its countries of operations which cannot be addressed by local institutions alone. The EBRD is delighted to be working with ADM Capital and the other IFIs with the aim of having a positive stabilizing impact on the businesses of the investee companies, increasing job opportunities in the longer term, and helping achieve sustainable economic development,” said Varel Freeman, First Vice President of the EBRD.
Yvonne Bakkum, FMO Director of Private Equity, said, “In order to sustain our strong relationship with ADM Capital and based on the good track record of this fund manager, we will invest for the third time in a fund which is being managed by ADM Capital. Particularly, the fact that the fund enables financially distressed companies to get the opportunity to de-leverage their balance sheet, induce managerial and operational improvements and become economically viable again, has a high development impact.”
Lars Thunell, IFC Executive Vice President and CEO, said, “We’re delighted to work with ADM Capital, EBRD, and FMO on the Debt and Asset Recovery Program’s third investment in Europe and Central Asia. By supporting strong companies facing funding difficulties we can help maintain jobs and production, contributing to the overall economic stability of the region.”
The Debt and Asset Recovery Program was launched by IFC during the 2009 World Bank Group’s Annual Meetings in October. IFC will contribute up to $1.55 billion to the program over three years and expects to mobilize additional funding from other international financial institutions and private sector partners.
About ADM Capital
Founded in 1998 in the fallout of the Asian crisis, ADM Capital has over 12 years of experience in investing in Emerging Markets across 12 countries. With 48 people stationed in local offices in Hong Kong, Mumbai, Beijing, Istanbul and London, ADM Capital’s assets under management are now over $2.1 billion. For more information, visit www.admcap.com.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit www.ifc.org.
The Netherlands Development Finance Company is the international development bank of the Netherlands. FMO invests risk capital in companies and financial institutions in developing countries. With an investment portfolio of €4.6 billion, FMO is one of the largest bilateral private sector development banks worldwide. Thanks in part to its relationship with the Dutch government, FMO is able to take risks which commercial financiers are not—or not yet—prepared to take. FMO’s mission is to create flourishing enterprises, which can serve as engines of sustainable growth in their countries. For more information, visit http://www.fmo.nl