Unicorn Capital Partners, a Russia-based infrastructure-industrial firm has held a first close on its maiden fund, having raised $100 million from a “friends and family” circle within Russia.
The firm hopes to hold a final close of $250 million or more by the end of 2013, and has set the fund’s hard cap at $500 million, according to Sergei Moiseyev, the firm’s co-founder and managing partner.
The fund’s focus will be “infrastructure-industrial”, which means the firm will make investments in factories or businesses that supply the necessary components of infrastructure, such as street lights.
“The idea behind our fund is to buy up plants and factories that fuel infrastructure,” Moiseyev said. “Going east to west in Russia, there is a gigantic opportunity to build up the infrastructure that is totally absent now.” The Russian countryside west of Moscow still lacks much of the basic infrastructure the West takes for granted, he added.
All investments will be Russia-focused, but Unicorn will also be looking at assets outside of Russia that can support Russia’s infrastructure, Moiseyev told Infrastructure Investor.
Unicorn’s LPs for its fund’s first close are made up of 10 domestic investors, primarily high net-worth individuals and family offices, and a few funds of funds, Moiseyev said. Unicorn has been marketing the fund since September of last year.
By around September or October 2013, Unicorn hopes to have raised another $150 million from mostly local investors in order to hold its second close. After that, it will target more international LPs to “dilute” its local investor base, and hopes to hold a final close near its $500 million hard cap by the end of the year, Moiseyev said.
With its first close finalised, Unicorn expects to begin deploying capital soon; Moiseyev said the firm could announce its first deal as early as next week.
Since the fund’s investments will be industrial in nature, Unicorn is targeting an IRR [internal rate of return] of 25 percent. The target leverage on each deal will be about 70 percent, Moiseyev said.
Since Moiseyev worked in a Russian industrial conglomerate and his co-founding partner Andrei Dementiev worked in the Russian government for a combined 30 years, Moiseyev believes Unicorn will have much to offer a sector that virtually no one is looking at.
“It's really a vacuum out there screaming to be filled up using local or international production,” he said.