Caucasus Growth Fund important step for development of equity capital markets in Armenia

YEREVAN, April 27. /ARKA/. Establishment of the Caucasus Growth Fund is an important step for the development of equity capital markets in Armenia, head of the Yerevan office of the European Bank for Reconstruction and Development (EBRD), Valeriu Razlog, told a news conference today.

The Caucasus Growth Fund, a newly-established fund, backed and managed by Small Enterprise Assistance Funds (SEAF), a global fund manager, raised $42 million to boost private investment in the three Caucasus countries.

International financial institutions such as the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation, a member of the World Bank Group (IFC), the Netherlands Development Bank (FMO) and the Black Sea Trade and Development Bank (BSTDB), teamed up to support small and medium businesses in the Caucasus by investing in a new private equity fund.

"The availability of private capital is a key component in forming active capital market in any country,» Mr. Razlog said. “This project will bring much-needed resources and knowledge to support the development of prospective businesses,” he added.

He said this is a rare type of financing in the region and in the world which is an alternative to traditional forms of financing. 

Razlog emphasized that this initiative will have a demonstrative effect, as local and international corporate communities will see that the private equity capital plays an important role both in Armenia and in the South Caucasus region.

“The fund is flexible and could invest in almost any business sector,” Esben Emborg, the Managing Partner of SEAF Management said , adding that the investment target will be $500,000-$5 million in each company repayable in 5-7 years.

Emborg said that the Caucasus Growth Fund will be the first institutional-quality fund dedicated to providing debt and equity capital to small and medium enterprises in Armenia, Azerbaijan and Georgia. Moreover, international financial institutions will contribute an additional $2 million to SEAF Caucasus Growth Fund, with a target of $70 million. Emborg explained that the financing will not be available to companies with $15 million turnover or companies with 250 workers on payrolls.

SEAF is a global fund manager with an extensive track record of developing local fund management capacity and providing growth and expansion capital to small and medium enterprises in emerging markets in Eastern Europe, Latin America and Asia.-0-