Top international financial institutions teamed up with Small Enterprise Assistance Funds (SEAF) to support local businesses with private equity financing in the Caucasus region this Spring, after launching the Caucasus Growth Fund on March 30, in Tbilisi, Georgia.
The EBRD (the European Bank for Reconstruction and Development), IFC (International Finance Corporation), FMO (the Netherlands Development Bank), and BSTDB (Black Sea Trade and Development Bank) have agreed to invest in the Caucasus Growth Fund (the “Fund”). The Fund is backed and managed by SEAF, a global fund manager.
International financial institutions are providing USD 38 million and SEAF will contribute an additional USD 2 million to the SEAF Caucasus Growth Fund, with an ultimate target size of USD 60 million. It will be the first institutional-quality fund dedicated to providing mezzanine debt and equity capital to small and medium enterprises (SMEs) in Armenia, Azerbaijan, and Georgia.
The Fund will make risk capital investments in SMEs across a range of industries, with particular focus on consumer and business services, agribusiness, distribution, energy, and retail, all sectors which remain underserved by other capital providers.
“Fostering entrepreneurship in the countries that strive towards a market economy is the cornerstone of the EBRD’s strategy. The EBRD is delighted to join forces with its partner IFIs and SEAF to support the development of the private equity sector in the region,” said Paul-Henri Forestier, EBRD Director for Caucasus, Moldova, and Belarus.
Tomasz Telma, IFC Director for Europe and Central Asia, noted that, “lack of capital is one of the most serious challenges for small and medium enterprises in the southern Caucasus. Through its investment in the SEAF Caucasus Growth Fund, IFC is helping address an important obstacle to these small and medium enterprises, which represent the backbone of economic diversification and employment.”
“Support [for] the development of small and medium enterprises in the Black Sea region is a strategic priority for BSTDB. The SEAF Caucasus Growth Fund will facilitate access to affordable capital for competitive private businesses and foster good business practices and knowledge transfer,” said Andrey Butin, BSTDB Director for Financial Institutions.
“SMEs in the Caucasus region are underserved by traditional financing streams,” said SEAF Fund Principal Esben Emborg. “The existing funding tends to cater to larger investments. SEAF’s Fund targets SMEs, bolstering the companies that represent the backbone of the region’s economy.”
The EBRD, owned by 63 countries and two intergovernmental institutions, is an international financial institution that supports projects from central Europe to central Asia and beyond. Investing primarily in private sector clients whose needs cannot be fully met by the market, the Bank fosters transition towards market economies. See also www.ebrd.com
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. In fiscal 2011, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. See also www1.ifc.org
BSTDB is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine. BSTDB supports economic development by providing loans, credit lines, equity, and guarantees for projects and trade financing in the public and private sectors in its member countries. See alsowww.bstdb.org
FMO is the Dutch development bank. We support sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO focuses on four sectors that have high development impact: financial institutions, energy, housing, and agribusiness. See also www.fmo.nl