Horizon Capital raises $200mn for third Ukraine fund, beating expectations

Horizon Capital raises $200mn for third Ukraine fund, beating expectations
Ukraine’s Horizon Capital said it was turning investors away as it beat a $150mn target and raised $200mn for third Ukraine fund / wiki
By Ben Aris in Berlin January 24, 2019

It’s still winter in Ukraine, but the weather is warming in the investment climate of the battered country. Ukraine’s leading private equity fund Horizon Capital has raised $200mn for its third Ukraine fund, beating expectations, the company announced on January 23.

“It is sending a message to the market that there are companies who want to invest long term capital in Ukraine,” Lenna Koszarny, Horizon’s CEO, said. “There is so much demand we are turning investors away.”

The initial goal was to raise $150mn but an increasing number of investors believe that Ukraine has reached the bottom of its crisis bowl and will grow from here.

“In what marks the largest private equity fund raised for Ukraine in a decade, Horizon’s Emerging Europe Growth Fund III (EEGF III) received strong backing from existing and new investors, attracted by the excellent value, fast growth and abundance of opportunities that Ukraine offers,” Horizon said in a press release.

Koszarny is founding partner of Horizon Capital, which has $850mn in assets under management (AUM) in four funds. Horizon’s Ukraine-focused funds have invested over $650mn in 140 companies employing over 46,000 people, the fund says.

“Our fundraising success should send a strong signal that Ukraine offers tremendous rewards for those willing to look past the headlines,” said Koszarny in a statement. “This fund is a testament to our long-term, valued investor relationships, our strong team of talented professionals and export-focused investment strategy, and our solid track record of successful investing in this country. Since our first close last year, the new fund has already made six compelling investments and will close many more exciting deals in the years to come.”

Koszarny is also executive vice-president of Western NIS Enterprise Fund, a $150mn US-government backed fund, according to Horizon Capital’s website.

The rival Dragon Capital Investment Fund also attracted new investors in 2018 and said it has invested $400mn into Ukrainian real estate since 2016 together with its partners, the press service said in October last year.

A string of international retail majors have entered the market or are in the process of entering the market, as bne IntelliNews reported over the last months, including Swedish furniture store IKEA, French apparel company Decathlon and French supermarket chain Auchan to name the most prominent. These chains are early movers in emerging markets. Once they enter a market they are committed to the long haul and want to get in early to quickly capture as much market share as possible.

Horizon Capital started life as a USAID funded project, designed to promote democracy by helping private business a decade ago and was run by former finance minister Natalie Jaresko, who took the fund private, as is usual within this scheme.

Jaresko quit when she was made minister, and the fund has become a lot more active in the last year. It has also expanded from its traditional focus on Ukraine to invest in other countries in the region.

In 2018 it was a lead investor in the landmark deal brokered by the European Bank for Reconstruction and Development (EBRD) to take a 41% stake in Moldova’s biggest bank.

On October 2 the EBRD, together with Horizon Capital and the Latvia-based AB Invalda INVL fund bought the stake in Moldova-Agroindbank (MAIB) after that stake was confiscated from “non-transparent shareholders” by the central bank. The three paid MDL451.533mn (€23mn) for the stake. Horizon Capital is responsible for strategic direction and management of the MAIB stake on behalf of the consortium, the EBRD said at the time.

In November Horizon Capital also bought a minority stake in the Yarych Confectionary Factory LLC based in the Lviv region, Yarych’s press service reported, citied by Interfax Ukraine on November 5.

"As we plan to increase production to extend our presence in Ukraine and abroad, partnership with Horizon Capital is the basis of our expansion strategy. In future we will accelerate our growth by strengthening the company's brand position in our main market and develop new segments," Yarych founder Volodymyr Hnatiuk said, as cited by the newswire.

 

 

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