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EBRD Welcomes Success of
New Ukraine Equity Growth Fund
By Vanora Bennett, EBRD
London, UK, Fri, Apr 28, 2023
EBRD welcomes successful interim closing by trailblazing Horizon Capital Growth Fund IV
- New fund exceeds target, reaching a major milestone by raising US$ 254 million at 2nd closing
- Fund, to which EBRD committed US$ 40 million at first closing, makes growth equity investments in Ukraine and Moldova
The European Bank for Reconstruction and Development (EBRD) welcomes the successful fundraising efforts of Horizon Capital Growth Fund IV (HCGF IV), which holds its interim closing today, reaching US$ 254 million.
The trailblazing fund, in which the EBRD has invested, has been set up to make growth equity investments in Ukraine and Moldova, ranging on average from US$ 10 million to USD$ 30 million, with a focus on tech and export-oriented small and medium-sized enterprises (SMEs).
When the fund was launched last September, the EBRD committed up to US$ 40 million (€40 million) to HCGF IV, managed by Horizon Capital, a leading private-equity manager in Ukraine and Moldova and a longstanding EBRD client. Having held its initial closing in September 2022 at US$ 125 million, Horizon continued its fundraising efforts and has now reached an interim closing at $254 million which represents a remarkable achievement in the context of this Ukraine-focused fund being raised during the time of war.
The EBRD investment is in line with the Bank’s commitment to invest €3 billion in Ukraine in 2022-23. The Bank has stood unwaveringly by Ukraine since the Russian invasion last year, and is focusing investments on energy and food security, vital infrastructure, trade, and support for the private sector. The aim is to support businesses affected by the war and support livelihoods.
“In the context of the war on Ukraine, the ambition of HCGF IV is unprecedented and we are excited by its success in fundraising,” said Hassan El Khatib, EBRD Managing Director, Equity. “The fund will not only improve the resilience of private capital markets in the region by developing private equity as an alternative funding source but also boost inclusion by offering support to businesses affected by the war. Through this investment, the EBRD and its international partners are effectively bridging a financing gap caused by adverse market conditions, by bringing in a private equity fund to add to the pool of financing available.”
The fund’s first-close investors, alongside the EBRD, included the International Finance Corporation (IFC), DEG - Deutsche Investitions und Entwicklungsgesellschaft, the Dutch Entrepreneurial Development Bank (FMO), the Swiss Investment Fund for Emerging Markets, the Western NIS Enterprise Fund, and the Zero Gap Fund, an impact investing collaboration between The Rockefeller Foundation and the John D. and Catherine T. MacArthur Foundation.
New investors joining the Fund at this interim closing include US International Development Finance Corporation (DFC), Société de Promotion et de Participation pour la Coopération Économique (Proparco), Swedfund International AB (Swedfund), Finnish Fund for Industrial Cooperation Ltd. (Finnfund) and Danish Investment Fund for Developing Countries (IFU).
HCGF IV also announced at the interim closing that it has become the first fund in Central and Eastern Europe (CEE) to be awarded 2X Flagship Fund status. As such, it will help advance the economic participation of women as entrepreneurs, as business leaders, and as employees.
Russia’s war on Ukraine has created unprecedented challenges for the Ukrainian economy. Some businesses have ceased operations, while others have been forced to adapt to a new reality of logistical disruptions, fuel deficits, relocated production facilities and staff, tighter currency controls and shortages of finance. Ukrainian companies have demonstrated great resilience, however, while tech-focused SMEs have proven their importance to the economy since the start the war, contributing to the country’s economic revival.
HCGF IV will maintain Horizon Capital’s focus on tech and export-oriented companies, initiated over a decade ago, building on the contribution made to the region’s information technology (IT) sector by Horizon Capital’s predecessor vintage 2017 US$ 200 million fund, also backed by the EBRD.