Funds: Enterprise Investors to raise 4th fund

Enterprise Investors, the Delaware-registered specialist Polish venture capital firm, is the process of raising a fourth fund, Polish Private Equity Fund IV, which for the first time will target up to 25 per cent of its investments outside Poland, specifically in central and eastern Europe.

According to managing partner Jacek Siwicki, the firm has been looking for investment opportunities outside Poland since the middle of last year. This culminated in December in an investment in Mobil Rom, a Romanian mobile telephone operator. This opportunity was shopped by Lehman Brothers and saw France Telecom coming in as lead investor.

Enterprise Investors has previously raised $151 million (EURO166 million) through Polish Private Equity I and II combined, $164 million (EURO180 million) through Polish Private Equity III and $240 million (EURO265 million) through Polish American Enterprise Fund. The target for Polish Private Equity Fund IV is $300 million (EURO330 million). A first closing on $150 million (EURO165 million) is expected to take place in late June, with a second and final closing planned for the autumn.

Investors in the latest fund are restricted to pension fund of multinational companies and international banks as a result of imperfect Polish legislation that presents obstacles for Polish-based LPs wanting to invest in a Delaware-based fund, says Siwicki. Siwicki has recently been appointed managing partner to oversee both the Polish strategy and operations and co-ordinate the firm’s investment in central and eastern Europe – see people this issue.

While this latest fund will have a clear geographic investment focus, its sector focus is broader. Around 20 per cent is targeted for IT and Internet-related investments and 10 per cent to 15 per cent for telecommunications (including cable television); the remainder will be invested in traditional buyout and development capital opportunities and – in a new departure for Enterprise Investors – in healthcare companies. Siwicki does not allocate an investment percentage to healthcare, which he says has become an interesting investment proposition in Poland following the January 1999 reform in which the Polish government created regional organizations with responsibility for contracting out healthcare services – broadly along the lines of the US healthcare model. Enterprise Investors expects to complete its first investment in the Polish healthcare space this summer.

Polish Private Equity Fund IV expects to raise 60 per cent of its target from existing investors and have a 60:40 ratio of US to European LPs. Polish Private Equity Fund I & II were raised in 1992 and co-invested alongside one another, essentially operating as one $151 million (EURO166 million) fund. The split was necessary due to Delaware and UK-based limited partners. The $240 million (EURO265 million) Polish American Enterprise Fund was US congressional money given to the Enterprise Investors fund in 1990.