EEGF III NETHERLANDS LP
Status: Approved investmentWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer
In 2017 FMO invested in EEGF III (Emerging Europe Growth Fund III), a private equity fund in Ukraine, managed by Horizon Capital, with a commitment of USD 7.5 mln. We also invested in the previous two funds, started in 2006 and 2008 respectively, which both are performing well in commercial terms as well as ESG matters. Now we intend to participate in the second close of EEGF III with a top-up commitment of USD 10 mln.
What is our funding objective?
EEGF III has been set up to invest in fast-growing, export-oriented companies that leverage Ukraine’s cost competitive platform to generate global revenues primarily in IT, light manufacturing, food and agriculture. As already foreseen at the original approval, FMO's commitment was to increase considerably at the second close, based on the political/macro-economic developments in Ukraine and management track record. For final close of the total fund the hard cap amounts to USD 200 mln.
Why do we fund this investment?
The Ukrainian market provides an excellent ecosystem for export-oriented companies because of geographical location with proximity to European, Middle East and Asian markets, competitive shipping logistics with short land transit times to the EU and deep ports in the Black Sea, and the signing of the Deep and Comprehensive Free Trade Agreement (“DCFTA”) in Jan 2016, between Ukraine and the EU, provides strong incentives for exports from lower trade friction costs and a more regulated framework. Furthermore Ukraine has a large and competitive labour force both for IT and skilled manufacturing. Private Equity penetration in Ukraine is rather low and investments have significantly decreased over the past years, leaving the Fund with an attractive universe of investments in a ‘buyer’s market’. With taking part in this second closing we will give off a positive signal to other potential LP’s, and thus we can play a catalyzing role in increasing the fund size. Also, with increasing the fund size, investments can be made in more companies, which will further support Ukraine’s economy.
What is the Environmental and Social categorization rationale?
E&S category is "B". The target and pipeline of EEGF III mainly consist of low-medium Environmental & Social risk activities (e.g. IT, light manufacturing, F&B). The Fund has an E&S management system in place and a team member dedicated to ESG. Previous co-investments with the first two funds have been managed professionally by Horizon in terms of E&S. FMO’s investment code will be applied.
More investments
| Date | Total FMO financing |
|---|---|
| 4/24/2018 | USD 10.00 MLN |
- Region
- Europe & Central Asia
- Country
- Ukraine
- Sector
- Infrastructure, Manufacturing and Services
- Effective date
- 6/21/2017
- Total FMO financing
- USD 17.50 MLN
- Funding
- FMO NV
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B