Innova closes third ven-cap fund, eyes fourth in 2005
Innova Capital (IC), a Warsaw-based private equity fund adviser, last week announced it had closed its third fund in 10 years, Innova/3, raising 110 million ($95.7 million) despite a tough economic environment.
Innova Capital launched its first fund in Poland in 1994 and another in 1998, raising a total of 188.5 million ($164 million). Innova/3 was initially expected to raise 150 million ($129 million).
"This is quite an achievement that we've raised this fund because Innova/3 comes during a difficult time," said Steven Buckley, IC's co-founder. "In the 11 years I've been in Poland you have the highest unemployment rate and the lowest GDP growth in probably eight years. And stock markets are an inadequate source of financing for SMEs (small- to medium-size enterprises) and Polish bank interest rates are among the highest in the world. So, private equity, in our opinion, is filling a void during tough times. Additionally, times are tough all around the world and many companies that used to look for investment opportunities in Poland are refocusing on their home markets."
About 70% of Innova/3's investors have money in Innova's first two funds. "But there is no U.S. money because American institutions retreated," Buckley said. "Our capital in the Innova/3 is 100% European. Americans retreated because of the drop on the public equity market (in the United States) and being American I can also say that when bad things happen, the Americans retreat in a hurry to their shores. They may come back later, though."
Europeans are increasing their equity investments in the region. "For Europeans private equity is a very strong asset area," Buckley said. "Additionally, most European investors believe that the 10 accession countries will join the EU in the lifetime of this new fund," Buckley said. "Europe is shifting eastward and it's becoming integrated and these trends create cross-border investment opportunities and we'll take advantage of that."
By 2005, IC expects to allocate 85 million ($74 million) of Innova/3's capital in Poland and the rest in other Central and Eastern European countries and Western Europe. "The fund's capital will be primarily invested in EU accession countries but we'll also make our first investment in Western Europe," said Robert L. Conn, an IC co-founder. Innova/3 is the group's first Central Europe-focused fund that may also invest in Western Europe. "We're interested in two companies in Poland and we're also approaching three companies in the Czech Republic," Conn said. "One of them is a Western European cross-border investment."
Innova is also eyeing a number of Central European cross-border investment opportunities with Germany and Scandinavia, focusing on the business-services segment of the market, according to Conn.
"We've discovered that you make better investments in businesses you understand, so 80% of our investments will continue to be in the business-services segment," he said.
In the past 10 years, IC has concluded 23 deals reaching a 51.45% annual return rate, investing 140 million ($121.8 million) in specialist media such as Town&City, @Entertainment and Beverly Hills Video.
Innova Capital launched its first fund in Poland in 1994 and another in 1998, raising a total of 188.5 million ($164 million). Innova/3 was initially expected to raise 150 million ($129 million).
"This is quite an achievement that we've raised this fund because Innova/3 comes during a difficult time," said Steven Buckley, IC's co-founder. "In the 11 years I've been in Poland you have the highest unemployment rate and the lowest GDP growth in probably eight years. And stock markets are an inadequate source of financing for SMEs (small- to medium-size enterprises) and Polish bank interest rates are among the highest in the world. So, private equity, in our opinion, is filling a void during tough times. Additionally, times are tough all around the world and many companies that used to look for investment opportunities in Poland are refocusing on their home markets."
About 70% of Innova/3's investors have money in Innova's first two funds. "But there is no U.S. money because American institutions retreated," Buckley said. "Our capital in the Innova/3 is 100% European. Americans retreated because of the drop on the public equity market (in the United States) and being American I can also say that when bad things happen, the Americans retreat in a hurry to their shores. They may come back later, though."
Europeans are increasing their equity investments in the region. "For Europeans private equity is a very strong asset area," Buckley said. "Additionally, most European investors believe that the 10 accession countries will join the EU in the lifetime of this new fund," Buckley said. "Europe is shifting eastward and it's becoming integrated and these trends create cross-border investment opportunities and we'll take advantage of that."
By 2005, IC expects to allocate 85 million ($74 million) of Innova/3's capital in Poland and the rest in other Central and Eastern European countries and Western Europe. "The fund's capital will be primarily invested in EU accession countries but we'll also make our first investment in Western Europe," said Robert L. Conn, an IC co-founder. Innova/3 is the group's first Central Europe-focused fund that may also invest in Western Europe. "We're interested in two companies in Poland and we're also approaching three companies in the Czech Republic," Conn said. "One of them is a Western European cross-border investment."
Innova is also eyeing a number of Central European cross-border investment opportunities with Germany and Scandinavia, focusing on the business-services segment of the market, according to Conn.
"We've discovered that you make better investments in businesses you understand, so 80% of our investments will continue to be in the business-services segment," he said.
In the past 10 years, IC has concluded 23 deals reaching a 51.45% annual return rate, investing 140 million ($121.8 million) in specialist media such as Town&City, @Entertainment and Beverly Hills Video.
