A co-investment agreement with the AIG New Europe Fund, a private equity fund investing in central and eastern Europe, focusing on the Czech Republic, Hungary, Poland and Romania.
AIGNEF will make equity or quasi-equity investments in private companies, typically in excess of 15 per cent of the outstanding shares of a portfolio company, which will permit AIGNEF and the SPV to exercise significant influence or control over a portfolio company's business, financial strategy and implementation. The size and regional coverage of AIGNEF will enable it to participate in medium-sized privatisations as well as in industry consolidations that will emerge both within and across countries in the region.
The investment will provide portofolio companies a combination of management, financial and technical expertise, which will enable them to expand their operations and produce internationally competitive products on a commercially viable basis. The AIGNEF's unique strategic focus on industry consolidations and the development of regional market leaders will be a very important factor towards achieving this goal.
AIGNEF and the SPV will directly contribute to enhancing entrepreneurship and the efficiency in investee enterprises by providing an active ownership role, strong governance and transfer of know-how to privatised and private companies.
The AIG New Europe Fund (AIGNEF) is sponsored by the American International Group (AIG), a large international insurance and financial services organisation. AIGNEF is managed as a joint venture between AIG Capital Partners, the private equity arm of AIG, and Central European Trust, a strategic and financial advisory firm specialising in central and eastern Europe. AIGNEF’s principal focus is the acquisition of equity and equity-related securities of private sector companies operating primarily in the Czech Republic, Hungary, Poland and Romania. AIGNEF will also consider investments in companies operating primarily in Bulgaria, Croatia, the Former Yugoslav Republic of Macedonia, Moldova, the Slovak Republic, Slovenia and Ukraine.
The EBRD will co-invest alongside AIGNEF through a special purpose vehicle (SPV). The EBRD has subscribed for a capital commitment of US$ 50 million (EUR 46 million) in the SPV’s capital. The manager of the SPV is the same as that for AIGNEF. The Bank may also co-invest directly alongside AIGNEF for an aggregate amount of up to US$ 25 million (EUR 23.2 million). The following investments have been approved under this direct co-investment line:
EmpikCentrum Investments S.A. (ECI): in July-August 1999 AIGNEF and the EBRD invested US$ 20 million (EUR 18.5 million) each in a convertible bond issued by ECI to finance its operations in Poland (department stores, multimedia, books press, cosmetics stores, mail order, related wholesale).
AIGNEF held its initial closing in August 1998 with total capital commitments of US$ 260 million (EUR 241 million) and may hold subsequent closings for aggregate capital commitments of up to US$ 350 million (EUR 324 million).
The SPV will follow the EBRD's Environmental Procedures for Investment Funds. In implementing these procedures, the SPV will assess potential environmental issues associated with its investments, which are required to comply, at a minimum, with local/national health, safety, environmental and public consultation requirements.
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Text of the PIP