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Romanian post-privatisation fund to be financed by EBRD and Phare equity
A new fund targeted at Romania has been established with the help of the European Bank for Reconstruction and Development (EBRD) and the European Community (EC) to invest in privatised and new private sector enterprises in Romania. The EBRD is investing ECU 25 million in the Romanian Post-Privatisation Fund (RPPF), which will have a total capital of ECU 44 million. Through its Phare programme, the EC is providing ECU 15 million in equity and ECU 10 million in technical cooperation. The Phare funds will be channelled through the National Agency for Privatisation of Romania. G.E.D. Capital Development S.A., the Fund manager, is co-investing ECU 4 million.
"The Romanian Post-Privatisation Fund will make a contribution to overcoming one of the most significant stumbling blocks to the development of a sound private sector in Romania's economy, namely the low availability of long-term finance and risk capital to medium-sized enterprises", said Guy de Selliers, Deputy Vice President of the EBRD. "It will help to accelerate the post-privatisation restructuring of these enterprises and thus forms an essential part of the EBRD's operational and strategic objectives."
"The RPPF will act as a driving force that will demonstrate the capacity of Romanian enterprises to move forward", said François Lamoureux, the European Commission's Deputy Director-General for External Relations with Eastern Europe. "It will contribute to showing the willingness of Romania to welcome foreign investment, and promote fair competition, transparency and the opening of markets".
The RPPF will provide new equity capital and management assistance to medium-sized enterprises that are presently unable to raise private equity capital. It will not be limited to any particular industrial sectors. The technical assistance funds will be used for pre- and post-investment support of the investee companies.
The Fund is expected to invest most of its capital within four years, and to exit from its investments within 10 years. However, its effect will last longer, as proceeds of the Phare equity contributions after these initial 10 years will be used for further private sector development in projects to be agreed between the government of Romania and the European Commission.
G.E.D. Capital Development S.A., a joint venture incorporated in Spain, is controlled and led by the venture capital arm of Sociedades de Desarollo Empresarial, the leading Spanish venture capital group. Other members of the consortium are Gestlink, GCA, Axis and the Investment Bank of Austria.
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