Adriatic fund holds E30m first close

Poteza has held a domestic close for the Poteza Adriatic Fund, raising an initial E30m for investment in the states of South Eastern Europe.

The fund, which has a final close target of E75m, has so far secured investments from around a dozen financial and industrial groups in Slovenia. Having secured investments locally, the firm now intends to seek commitments from international investors. Poteza management have also agreed to commit at least 15 per cent (up to E11.25m) of the fund’s equity.

The firm is managed by four partners. Branko Drobnak, founder and majority owner of Poteza, and Drago Simcic, executive director. The other partners are Janez Klobcar, a former investment banker and Rok Petric, a former consultant with McKinsey. The firm plans to hire two additional private equity professionals, bringing the total size of the private equity team to nine.

Poteza plans to invest in buyouts, restructurings, and expansion capital transactions in Slovenia, Croatia, Serbia & Montenegro and Bosnia & Herzegovina. The fund may also make investments in Bulgaria and Romania. According to Petric, the Poteza Adriatic Fund is a buyout fund and will look particularly for investments in industries that have done well earlier in more advanced transition countries. Poteza said it had decided to raise the new fund, which is domiciled in the Netherlands, to invest in the quickly growing South Eastern European market.

Slovenia, the northernmost republic of the former Yugoslavia, has enjoyed steady growth since secession and now has a much higher GDP per capital than other states of the former Yugoslavia or Eastern Europe. “Slovenia has progressed well during the last decade and we intend to use our knowledge of our local market to support the growth of other states of the former Yugoslavia,” said Petric.

Poteza has made private equity investments since the early-1990s, investing capital generated from the company’s brokerage activities into Slovenian businesses. Poteza says its investments have achieved an average IRR of over 70 per cent.

The Poteza Adriatic Fund is the latest in a series of funds to come to market targeting the economic growth of the Central and South East European states ahead of the imminent enlargement of the European Union. In May 2004, Poland, Hungary, Czech Republic, Lithuania, Latvia, Estonia, Slovenia and Slovakia will be among a group of ten states to join the EU in a move that is expected to accelerate economic growth in those countries.

Last month, Mezzanine Management closed its first mezzanine fund targeting South East Europe. Accession Mezzanine Capital, based in Vienna, closed on E115m. Also this month, SigmaBleyzer, the US fund management company based in Ukraine, said it was planning to launch a $100m private equity fund investing in the expanding South East European economies.

Baring Private Equity Partners, the private equity unit of Dutch bank ING, is planning to launch a new fund focusing on Central Europe, with a target of E250m mooted.

In June, a group of European investors, including EBRD and Global Finance, launched a private equity fund aimed at investment in small to medium-sized enterprises (SMEs) in Bulgaria and Romania. The Global Bulgaria and Romania Growth Fund initial capitalisation will be E16.25m, which could be extended to E20m.