Unstable markets cause Pioneer to push back closing of new fund
Pioneer, which already runs the $61 million Pioneer Poland Fund, had hoped to close its new Central Europe Fund by the end of this year, said Richard Engel, vice president of Pioneer Investment Poland.
"Some of the investors decided to just wait before they commit any money to emerging markets," Engel said.
Now Pioneer plans to close the new fund, which is aimed primarily at Poland, by next June, he said.
The irony of Pioneer's fund raising difficulties is that shaky world markets have opened up even more investment possibilities for venture capital funds. Companies that would have normally executed an initial public offering (IPO) or sold debt to raise cash have been turned off by depressed equity markets and high interest rates. Many of those firms now are looking for private funds. Pioneer was actually talking to one company that had planned an IPO but now is thinking about taking on venture capital.
"For those who have money, it's not a bad time," said Jacek Siwicki, executive vice president of Enterprise Investors, which manages four funds in Poland worth a total of $505 million. "This is not the time to exit, but a time for more purchases."
Funds flush with cash have closed a number of new deals in recent months, managers said. Enterprise Investors, for example, has invested $20 million-$30 million in the last three months alone, Siwicki said. The firm invested a total of $100 million during all of 1997.
Siwicki said that about 50% of the money doled out this year went to two private firms, computer products distributor AB and software maker Teta. The remaining half went to portfolio investments in publicly traded companies. Siwicki said depressed prices on the stock exchange prompted the fund to invest heavily in equities.
"Earlier we didn't invest so aggressively," he said. He added that Enterprise Investors plans to invest about $60 million here this year.
Some venture capitalists, however, managed to close new funds despite emerging market fears. Poland Partners, which manages a $63 million fund dedicated to Poland, in September managed to close a new, $125 million Innova/98 fund. The fund, which will focus on Poland, has already placed $9 million of the money, said Magdalena Nowak, public relations manager at Poland Partners.
Pioneer's inability to close its new fund has forced the company to change its short-term investment strategy, Engel said. The fund has used up most of its $61 million Pioneer Poland Fund and only has $10 million left to play with, he said. Of the $61 million fund, $51 million can actually be invested, with the rest being used for expenses, he said.
The fund, however, has about $7 million set aside to use for second tranche investments in companies Pioneer has already committed to. The fund will now use that money for first-time investments, he said.
"First tranche investments are far more profitable," Engel said.
Pioneer will try to bring together other outside investors and syndicates to fulfill its promise to certain companies that they will receive a second tranche of money, he said.
"Some of the investors decided to just wait before they commit any money to emerging markets," Engel said.
Now Pioneer plans to close the new fund, which is aimed primarily at Poland, by next June, he said.
The irony of Pioneer's fund raising difficulties is that shaky world markets have opened up even more investment possibilities for venture capital funds. Companies that would have normally executed an initial public offering (IPO) or sold debt to raise cash have been turned off by depressed equity markets and high interest rates. Many of those firms now are looking for private funds. Pioneer was actually talking to one company that had planned an IPO but now is thinking about taking on venture capital.
"For those who have money, it's not a bad time," said Jacek Siwicki, executive vice president of Enterprise Investors, which manages four funds in Poland worth a total of $505 million. "This is not the time to exit, but a time for more purchases."
Funds flush with cash have closed a number of new deals in recent months, managers said. Enterprise Investors, for example, has invested $20 million-$30 million in the last three months alone, Siwicki said. The firm invested a total of $100 million during all of 1997.
Siwicki said that about 50% of the money doled out this year went to two private firms, computer products distributor AB and software maker Teta. The remaining half went to portfolio investments in publicly traded companies. Siwicki said depressed prices on the stock exchange prompted the fund to invest heavily in equities.
"Earlier we didn't invest so aggressively," he said. He added that Enterprise Investors plans to invest about $60 million here this year.
Some venture capitalists, however, managed to close new funds despite emerging market fears. Poland Partners, which manages a $63 million fund dedicated to Poland, in September managed to close a new, $125 million Innova/98 fund. The fund, which will focus on Poland, has already placed $9 million of the money, said Magdalena Nowak, public relations manager at Poland Partners.
Pioneer's inability to close its new fund has forced the company to change its short-term investment strategy, Engel said. The fund has used up most of its $61 million Pioneer Poland Fund and only has $10 million left to play with, he said. Of the $61 million fund, $51 million can actually be invested, with the rest being used for expenses, he said.
The fund, however, has about $7 million set aside to use for second tranche investments in companies Pioneer has already committed to. The fund will now use that money for first-time investments, he said.
"First tranche investments are far more profitable," Engel said.
Pioneer will try to bring together other outside investors and syndicates to fulfill its promise to certain companies that they will receive a second tranche of money, he said.
