Baring Vostok Capital Partners (Baring Vostok), a subsidiary of Baring Private Equity Partners,
is well on its way to achieving its $150 million to $200 million target, having raised $102 million in commitments so far.
The investment vehicle is said to be the first direct investment fund raised in Russia since 1998 and will be targeting deals primarily in Russia and the Ukraine, where there are a greater number of opportunities than in other countries in the NIS region.
Several large investment companies, pension funds and financial institutions from the US and Western Europe have committed to the fund, that will be focusing on core industry sectors such as oil and gas, telecommunications, forestry, consumer products and information technology. The majority of commitments come from the US, UK and the Netherlands.
Average investment size will be between $3 million and $15 million and the fund is looking to invest in 15 to 20 companies. Investments are typically controlling stakes, but the fund will also take a significant number of minority stakes.
Three investments have already been made from the fund including Burren Energy, a leading independent oil company in the Caspian sea region and ruNet Holdings, a Russian IT services company.
Four senior partners lead Baring Vostok’s investment team: Michael Calvey, Jean Michel Broun, Andrei Terekhov and Alexei Kalinin. Each of the partners has several years experience managing private equity investments in the NIS region, including management of the First NIS Regional Fund (NIS Fund).
NIS Fund is a direct investment fund that was launched in 1994 with $160 million in capital. It has paid $225 million in dividends since inception and still owns substantial stakes in 12 enterprises.
Michael Calvey, managing partner of Baring Vostok, states that Baring Vostok weathered the 1998 financial crisis in Russia and still managed to generate excellent returns for shareholders.
He comments on the current investment climate: “Now the economic, political and business environment is healthy and steadily improving, yet entry prices for private investments are much lower than in previous years due to global market conditions and the lack of competition in Russia at present.”
“This combination creates potential for extraordinary returns as asset prices in Russia go through a major re-rating over the next five years.”
Baring Private Equity Partners (BPEP) is the third party private equity arm of ING Asset Management.