HEP Investors Inc. is targeting $60 million (ecu 54 million) for a fund for private Hungarian businesses.
By November, Hungarian Equity Partners (HEP) had rounded up $30 million.
The fund, launched in October, has raised $8.5 million from the EBRD, $12 million from Private Equity Holding, a Vontobel group fund-of-funds, and $9.5 million from the Hungarian American Enterprise Fund.
HEP, formed by managers of the US government-sponsored HAEF, is primarily a buyout fund, but will also provide capital to support restructuring, modernisation and expansion, and will also invest selectively in early-stage companies. The fund, together with HAEF resources, will constitute “one of the largest pools of equity available to entrepreneurs in Hungary”, according to Eriberto Scocimara, president and chief executive officer of the HAEF.
He explained: “Unlike most traditional private funds, which must return investment proceeds to their partners, HAEF can recycle its capital into new investments”.
Set up in 1990 to encourage private sector development in Hungary, the HAEF is a privately-managed investment fund financed with $70 million from the US Agency for International Development. Francis Skrobiszewski, vice-president of the HAEF, said the launch of HEP was seen as “a natural progression” for the enterprise fund.
The establishment of HEP mirrors recent developments at the Polish American Enterprise Fund, another US government sponsored vehicle. Earlier this year, the PAEF’s managers raised $162 million for their first private capital vehicle, the Polish Equity Fund.
Francis Skrobiszewski, who has for the past five years divided his time between the HAEF and PAEF, commented: “The main difference between now and a few years ago is that we are now working in a more evolved marketplace”.
Two other US government-backed enterprise funds are currently involved in raising private sector funds. The US Russia Investment Fund, also backed by the US AID, will launch its first private sector fund early in 1998. Global Partner Ventures, which manages the US Defense Department-sponsored Defence Enterprise Fund, began raising money in September for its $100 million NIS Transformation Fund.