Caucasus growth fund acquires 40% of Armenia’s new force for $2 million

YEREVAN, April 3. /ARKA/. On April 3, the USAID-funded Enterprise Development and Market Competitiveness (EDMC) Project and the Small Enterprise Assistance Funds (SEAF) Armenia announced the first equity investment in Armenia made by the SEAF Caucasus Growth Fund. The investment contract was signed by Managing Principal Partner of SEAF Caucasus Growth Fund Esben Emborg and Arthur Hovakimyan, Managing Partner of New Force LLC – a local distribution company in Armenia.

The fund, investing from $500,000 to $5 million in companies, acquires 30 to 40 percent of their equities for five years with a right to resell them.  

The head of the fund said after signing the agreement that during the next five years the equity investment will be used to enhance the company’s activity in Armenia and to expand to Georgia.

He said the funds attracted by the company will be used for creation of a Emborg said that NewForce will use the investment to create a regional distribution platform to export and distribute local and international products (food and non-food), thereby contributing to increased sales and income for Armenian companies.

He said that SME in Armenia and in Caucasus is a quite complicated sector, and existence of Small Enterprise Assistance Funds is Armenia is a good impetus for large investors. 

This is the fund’s first portfolio investment in Armenia’s small business. Some 93 companies have applied for the investment in 23012 and 2013. Armenia’s SEAF looked through 29 of them, since these companies met all the requirements of the fund. In particular, they earned at least $500,000 and up to $15 million every year, and they had no more than 250 employees each. 

Two Georgian companies have received financing from the fund as well. There is no such a company in Azerbaijan so far. 

The fund’s investments for Caucasus total $46 million. 

The Caucasus Growth Fund is financed by European Bank for Reconstruction and Development, International Finance Corporation, Entrepreneurial Development Bank of the Netherlands and the Black Sea Trade and Development Bank.  

The fund was established almost one year ago. It is designed for investing funds in shareholder capital of small and medium companies in Caucasus and to lend money to them. 

The fund invests money in consumer and business services, agriculture, energy and retail trade areas. ---0---