The Bank is contemplating to become one of the anchor investors in the Value Growth Fund (VGF), an equity fund targeting restructuring opportunities in the manufacturing/services industry in the Slovak Republic. The Fund will acquire control positions in financially distressed companies at either pre- or post-bankruptcy stage, invest additional funds, and actively manage the companies by providing top managers and transfer lacking skills. The Fund will exit via sales to trade buyers.
VGF will contribute to the restructuring of the Slovak corporate sector by (i) expanding availability of capital and transferring management skills to investee companies; and (ii) re-launching companies in temporary distress (but showing a potentially attractive combination of product/market/skills) into the full productive cycle, thus providing the basis for a future increase in employment and attracting foreign direct investment.
VGF, investing in highly leveraged firms requiring financial and/or managerial restructuring based in Slovakia, will be managed by a General Partner established by Value Management Services, an Austrian domiciled fund management company specialising in turnaround situations. The General Partner will provide active and intensive turnaround management to the investee companies.
The Bank will commit itself to participate as a core investor in VGF by investing about €5 million at the first closing and up to 35 per cent of total Fund commitments at the final closing.
The target size of the Fund is €30 million, with first closing expected in September 2002, with minimum commitments of €14 million.
In addition to the EBRD, Slovak – American Enterprise Fund and Raiffeisen Zentralbank Osterreich AG will become the anchor investor to the VGF. Other Slovak local banks have also expressed their interest to invest at first closing.
VGF will follow the EBRD's Environmental Procedures for Investment Funds. In implementing these procedures, the Fund 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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