Silk Road Fund backs $1bn CEE-focused fund

Beijing is also pledging €2bn of financings through China Development Bank to the region, in addition to the fund.

The China Central and Eastern Europe Investment Cooperation Fund, sponsored by Export-Import Bank of China, has closed its second phase of fundraising on $1 billion at end of last year with support from Silk Road Fund, Hungary’s Export-Import Bank and its sponsor.

The $1 billion of fresh capital targets infrastructure investments in Central and Eastern European countries. The Hungarian EXIM Bank, which committed to the vehicle when it was launched in 2013, is contributing $70 million to the second fundraise, according to local media reports.

The amounts committed from Silk Road Fund and other LPs were not disclosed. Silk Road Fund had not responded to queries at the time of publication.

“The fund has yet to make any investments, but with capital now in place, the investment team is starting to look at projects, which would include both greenfield and brownfield assets,” said sources familiar with the fundraise. The sources added that the China-CEE fund will continue to raise capital for investments in the region.

Chinese Premier Li Keqiang announced the launch of the second phase of the China-CEE Fund last November at a summit of heads of government of Central and Eastern European countries and China. Li added that China Development Bank will provide €2 billion of financing to projects in the region, in addition to the $1 billion fund scheme.

Beijing launched the first phase of the fund in November 2013 with an initial capital commitment of $435 million. The vehicle aims to invest in infrastructure, telecommunications, energy, manufacturing, education, medical and other areas within 16 countries in Central and Eastern Europe.

It has invested in 11 projects or companies, according to the website of fund advisor CEE Equity Partners. The portfolio includes several wind farms in Poland and a solar plant developer, a Hungarian telecommunications services provider, a Hungarian education enterprise and a construction company of sports facilities in Bulgaria.