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BGK and EIF create Polish Growth Fund of Funds to stimulate equity investments and economic development in Poland

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    Date: 11 April 2013

The European Investment Fund (EIF) and Bank Gospodarstwa Krajowego (BGK) have established a Fund of Funds initiative to stimulate a greater level of equity investment into growth-focussed enterprises in Poland and the CEE region. At first closing, the Fund of Funds will have capital commitments of EUR 90 million with a target size of EUR 180 million at final closing as it is expected that other investors will join the initiative.

A “fund-of-funds" (FOF) is an investment initiative that creates a portfolio of investments into private equity and venture capital funds rather than investing directly in stocks, bonds or other securities.

The Fund of Funds, to be known as the Polish Growth Fund of Funds (PGFF) or Polski Fundusz-Funduszy Wzrostu, will create a portfolio of investments into Venture Capital, Private Equity and Mezzanine funds focussed on Poland and the CEE region over an investment period of five years. EIF will utilise its experience and expertise in managing similar initiatives in close collaboration with national and regional partners across Europe to implement the PGFF activities.

At this first stage, the Fund of Funds will be sized at EUR 90 million, combining EUR 30 million of commitments from EIF with EUR 60 million from BGK. However, in order to maximise the potential of the initiative, a size of EUR 180 million will be targeted and when reached EIF would increase its commitment up to EUR 60 million. Most current funds focus on the whole region and therefore to ensure that PGFF investments remain focussed on Poland, each investee fund in which PGFF invests into will need to commit at least two times the invested amount into Poland-based enterprises. The investment period will begin on June 1st 2013 and EIF will be seeking to open discussions with eligible fund managers immediately.

European Investment Fund Chief Executive Richard Pelly stated, “This initiative is a result of close co-operation between the EIF and BGK and we share the common goal of further developing the Venture Capital and Private Equity markets in Poland. Our partnership approach will create a long-term investment scheme that we expect will attract additional private finance and deliver a significant stimulus to equity investments into growth-focussed enterprises. The EIF is seeking to strengthen its relationship with national promotional institutions and our cooperation with BGK is a prime example of this strategy”.

Mr Dariusz Daniluk, President of BGK stated that the Polish Growth Fund-of-funds is another initiative that BGK recently undertook to develop and stimulate Polish economy. It is a part of the mission of the bank to support innovative small and medium enterprises. PGFF will provide relevant investors with long-term funding. Each PLN invested by BGK into PGFF will translate into 3 PLN invested into Polish economy. At the same time, establishment of PGFF will help BGK to build know-how to build such funds with other investors in the future. 

Background information

European Investment Fund

EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance.  EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 6.9bn at end 2012. With investments in over 435 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF guarantees loan portfolio totalled over EUR 4.7bn in close to 255 operations at end 2012, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

Bank Gospodarstwa Krajowego

Bank Gospodarstwa Krajowego is the only state-owned bank in Poland. Its mission is to support the central government’s social and economic programmes as well as regional development programmes designed at regional government level and run with the use of public funds, including those provided by the European Union as well as international financial institutions. BGK is actively involved in the consolidation of public finance, financing of regional and local authorities, municipal companies and healthcare establishments. It also supports Polish exports and infrastructure projects e.g. through the organisation of financing for such projects and promotion of public-private partnership.

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