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EBRD sets up Northwest Russia Regional Venture Fund
As part of its Regional Venture Fund programme in Russia, the European Bank for Reconstruction and Development (EBRD) has established a 10 year US$ 30 million equity fund to cover the north-west region of the country. US$ 20 million of technical assistance funds are also being provided by the Governments of Finland, Norway and Sweden.
Sven Hegstad, Director of the EBRD’s Privatisation and Restructuring team, said: “This is the seventh fund to be launched by the EBRD in Russia as part of a country-wide post-privatisation initiative. Our objective is to help privatised and new enterprises to modernise and restructure through equity investments. Targeted companies are those medium-sized enterprises which have been privatised under the Russian Government’s Mass Privatisation Programme.”
A consortium of companies will manage the Fund, bringing together skills in venture capital with experience in Russia and a broad international network based in industry, trade and finance. The consortium will co-invest 10 per cent of each investment made by the Fund.
A minimum of 75 per cent of the Fund’s investments will be in the Murmansk and Arkhangelsk Oblasts, the Republic of Karelia, Leningrad Oblast and St Petersburg, although more than half of investments must be invested in the first three of these areas. Investments of US$ 300,000 to US$ 3 million will be considered in companies with 200-5,000 employees. The Fund will normally take a significant minority stake but in some cases will consider a majority position. The investment capital is to be used to finance new projects, including associated working capital.
The Fund will be administered from offices in Murmansk, Arkhangelsk and Petrozavodsk, which are to be opened this year. The first investments are not expected to be made until 1996.
Making up the consortium are: Euroventures Management AB (a private Swedish venture capital firm), Den Norske Bank (Norwegian), FINNFUND (a Finnish development finance corporation), SITRA (one of the largest Finnish venture capital funds), Sitrans (a Finnish/Russian joint venture specialising in business consulting and technology transfer) and SND (Norwegian Industrial and Regional Development Fund).
The six existing Regional Venture Funds of the EBRD are Smolensk, the Urals, St Petersburg, Far East and Eastern Siberia, the Lower Volga and Southern Russia.
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