Small and medium-sized enterprises (SMEs) in Southeastern Europe will have improved access to finance, in the wake of an investment by IFC, a member of the World Bank Group, that aims to provide strategic and operational support to SMEs in the region.
IFC has invested €20 million in the Evolving Europe Principal Investments Fund I (Fund)—managed by Integral Venture Partners (Integral). SMEs, which drive economic development, innovation, and employment in the region, continue to face challenges in raising long-term capital through private equity. As a result, the fundraising volume and the number of funds remain low. Also, fundraising for growth strategies—the Fund’s focus—remains weak in the region, with only two new country-focused funds.
Stefan Tzvetkov, Founding Partner and CEO of Integral. said, “This investment from IFC marks another important milestone for Integral, allowing our initial Fund to further scale up and continue to provide capital to SMEs in our target markets, assist them in growing their businesses, and amplify their positive economic and social impact.”
The Fund is a first-time, generalist, pan-regional private equity and growth capital fund targeting €150 million. The aim is to invest in growth-oriented equity transactions in SMEs—primarily in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Montenegro, North Macedonia, Romania, Serbia, and Slovenia, as well as in the Czech Republic, Hungary, and Slovak Republic.
Director for Europe and Central Asia, IFC’s Wiebke Schloemer said, “Private equity funds bring growth capital, operational experience and industry expertise. They transform family- or entrepreneur-owned businesses into institutionally managed companies, thus increasing their competitiveness and productivity. This regional fund provides an opportunity to substantially deepen the private equity market in the region by attracting institutional equity. This will help fund the needs of fast-growing SMEs and improve their governance and business practices.”
The Fund will target 10 to 12 companies that are active across sectors—including consumer goods and services, health care, niche industrial products, and technology and telecommunications—and help them expand both in domestic and international markets. Also, it will help the companies improve operations and profitability. In addition to providing capital, Integral will help its investees implement IFC’s environmental and social standards and promote corporate governance through board seats and positions on key management committees.
IFC has supported the development of the private equity funds in its Europe and Central Asia Region for over 20 years, with commitments of over $500 million in the region as of June 2020.