SEAF-Macedonia LLC will be a US$ 13 million fund, established in Delaware, which will make equity and quasi-equity investments in small and medium-sized local companies. The fund will be managed by the Small Enterprise Assistance Funds (SEAF).
Equity capital remains virtually inaccessible for small and medium-sized enterprises in the country. One of the main factors limiting the ability of local banks to lend long term to this sector is the lack of adequate equity capital on the balance sheets of most SMEs. The main project objective is to provide equity financing for SME companies and to actively support their development.
The project will lead to the development of skills as SEAF will work closely with the management of the portfolio companies. It will demonstrate to the local market how to finance the growth of enterprises and will, thereby, act as a model for other operations. SEAF will train local investment officers in modern financing and business techniques, thus transferring financial and management know-how. The fund also will also set standards for corporate governance and business conduct.
The fund will invest in companies with strong growth potential. Targeted businesses will generally have, prior to investment, between 5 and 100 employees and between US$ 150,000 and US$ 2 million annual turnover. Potential portfolio companies will be majority locally owned. They will be private or "to be privatised" and will operate in the country. Investments, including follow-on investments, will range between US$ 400,000 and US$ 1 million.
The EBRD investment will total US$ 4 million, which will represent 30.77 per cent of the capital of the fund.
The total value of the fund is US$ 13 million
The fund will have an Environmental Policy to ensure that identification, analysis, approval and monitoring of portfolio investments is carried out with due regard to environmental factors and in accordance with the EBRD’s Environmental Procedures for Private Equity Funds. The fund will make no investment in companies engaged in activities listed on the EBRD’s Environmental Exclusion List, and will report to the Bank annually on the environmental performance of its investee companies.
SEAF has received directly from USAID a US$ 1 million grant that will partially cover some initial operating expenses and some portfolio company development expenses.
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