Belgian-based venture capital firms GIMV and KBC Private Equity have agreed a partnership under which each will make private equity investments totalling some EUR10m a year in medium-sized
Belgian-based venture capital firms GIMV and KBC Private Equity have agreed a partnership under which each will make private equity investments totalling some EUR10m a year in medium-sized Russian companies operating in fast-growing economic sectors.
This move fits in with KBC Private Equity’s strategy of expanding its activities in central and eastern Europe, while for GIMV, a one-time public-sector regional investment corporation turned listed private equity firm, it is a follow-up to the Eagle Russia Fund launched in 2006.
GIMV and KBC Private Equity will establish a new investment advisory company, Eagle Capital Partners, in which they will have an equal shareholding. Based on current market opportunities, the two firms each expect to invest around EUR30m over the next three years. The investment involved will be taken directly onto their balance sheets on a 50/50 basis.
After the Czech Republic, Poland, Hungary and recently Romania, the initiative will give KBC Private Equity a foothold in Russia, where has access to the experience of Absolut Bank, which was acquired by KBC Group last year.
Moscow-based Absolut Bank offers short- and medium-term loans, trade finance, cash management, leasing and capital and money-market products to small and mid-sized companies in Russia, and plans to expand its network from currently 50 branches in 18 regions to 130 branches in 25 regions by 2010.
Through its majority shareholding in Eagle Venture Partners, the management company of the Eagle Russia Fund and other funds, GIMV has been active in Russia since 1996 and has invested USD104m in 31 projects.
The partners say Russia offers a vast array of opportunities. The economy is the 10th largest in the world and has grown steadily at more than 6 per cent a year since 2000, underpinned by a positive trade balance, falling public debt and declining interest and inflation rates.
Consumer and investor consumer is buoyant, thanks to robust economic fundamentals, while rising incomes and standards of living are enabling consumers to spend more and creating investment opportunities in fast-developing consumer-related service sectors.
The Eagle Capital Partners investment team, comprising eight Russian and western European professionals who have worked together for many years, will target medium-sized Russian companies with a proven track record in sectors including food and beverages, personal and household care, leisure, building materials, packaging, pharmaceuticals, retail and distribution, telecoms and engineering.
The venture will aim to build up a portfolio of four to eight unlisted companies over the next three years. Initially, the partnership will take substantial minority stakes, though it does not rule out the possibility of taking majority shareholdings.
Since its incorporation in 1980, GIMV has become the main private equity and venture capital player in Belgium, as well as a major player in European and international markets, investing in information and communication technology, life sciences and clean technology in Belgium and abroad. GIMV currently manages some EUR1.6bn in assets, including third-party funds, and has been listed on Euronext Brussels since 1997.
KBC Private Equity, the private equity arm of the KBC group, provides growth capital to and finances buyouts of medium-sized companies ranging between EUR2m and EUR50m. It operates primarily in Belgium and in central and eastern Europe from offices in Brussels, Warsaw, Prague, Budapest and Bucharest.
KBC Private Equity may take either majority or minority shareholdings in companies and contributes financial resources in the form of equity finance and mezzanine finance. With a team of 30, it has around 60 active portfolio investments with a market value exceeding EUR450m.
