Venture capitalists shedding no tears over PAEF's pullout plans
"I think they (PAEF) should liquidate their assets," said Richard Engel, a vice president at Pioneer Investment Poland. "In principle, U.S. taxpayers' money should not compete with private American equity investors."
He added that new venture capital funding is growing in Poland and that existing funds are beefing up their capital. Massachusetts-based Pioneer, for example, is planning by the end of this year to set up a new Central European fund with $150 million-$250 million. Engel said a large portion of the fund was likely to be invested in Poland, although its creation is not linked to PAEF's decision to liquidate its assets.
"It's normal that they (PAEF) will pull out, the question is if there is enough private capital to replace it, and the answer is yes," said Steven Buckley, president of Poland Partners Management Co. The company currently manages a $63 million fund in Poland and next month plans to close a new $100 million fund directed here, called Innova/98 Fund.
And some funds are already eyeing the opportunity PAEF's withdrawal may present over the next two to three years. "It's quite possible that it will create possibilities," said Buckley.
Although PAEF's withdrawal will eliminate the possibility of government money crowding out private funds, the first opportunity may come from the sale of the government fund's assets.
PAEF currently has $240 million in Polish assets. On Friday, May 8, the fund's supervisory board decided to liquidate its investments, although it did not give a specific time frame for a withdrawal. In a statement issued after its meeting, the board said assets would be divested "in a way and time that will fully consider the interests of companies, their employees and other shareholders."
"It's good for venture capital firms as it creates an opportunity to invest in these firms," Buckley said. "We will be interested to talk to them."
But venture capitalists said PAEF's pullout should not present hazards to the companies it is withdrawing from, contrary to fears that emerged when talk of a pullout first arose late last month.
PAEF is managed by Enterprise Investors, which also has three private funds with total capital of $315 million. In addition, two other U.S. government-backed funds, Fundusz Mikro, which supports small businesses, and the Business Education Fund will continue to operate with funds from PAEF.
"As far as we understand, the team is going to stay, and they will continue investing," said Arnold Holle, an investment officer with Barings Central European Fund, which plans to invest around $250 million throughout Central Europe.
Funds said the continued presence of Fundusz Mikro would be important for the market because this would continue PAEF's original function of investing in smaller, riskier companies that would not likely receive private equity.
"Micro Fund is the most needed to provide money for small businesses, all the rest they (PAEF) have can be financed by private funds," Engel said.
PAEF will likely sell its assets in an orderly fashion probably in two to three years to get the highest possible price, Buckley said.
He added that new venture capital funding is growing in Poland and that existing funds are beefing up their capital. Massachusetts-based Pioneer, for example, is planning by the end of this year to set up a new Central European fund with $150 million-$250 million. Engel said a large portion of the fund was likely to be invested in Poland, although its creation is not linked to PAEF's decision to liquidate its assets.
"It's normal that they (PAEF) will pull out, the question is if there is enough private capital to replace it, and the answer is yes," said Steven Buckley, president of Poland Partners Management Co. The company currently manages a $63 million fund in Poland and next month plans to close a new $100 million fund directed here, called Innova/98 Fund.
And some funds are already eyeing the opportunity PAEF's withdrawal may present over the next two to three years. "It's quite possible that it will create possibilities," said Buckley.
Although PAEF's withdrawal will eliminate the possibility of government money crowding out private funds, the first opportunity may come from the sale of the government fund's assets.
PAEF currently has $240 million in Polish assets. On Friday, May 8, the fund's supervisory board decided to liquidate its investments, although it did not give a specific time frame for a withdrawal. In a statement issued after its meeting, the board said assets would be divested "in a way and time that will fully consider the interests of companies, their employees and other shareholders."
"It's good for venture capital firms as it creates an opportunity to invest in these firms," Buckley said. "We will be interested to talk to them."
But venture capitalists said PAEF's pullout should not present hazards to the companies it is withdrawing from, contrary to fears that emerged when talk of a pullout first arose late last month.
PAEF is managed by Enterprise Investors, which also has three private funds with total capital of $315 million. In addition, two other U.S. government-backed funds, Fundusz Mikro, which supports small businesses, and the Business Education Fund will continue to operate with funds from PAEF.
"As far as we understand, the team is going to stay, and they will continue investing," said Arnold Holle, an investment officer with Barings Central European Fund, which plans to invest around $250 million throughout Central Europe.
Funds said the continued presence of Fundusz Mikro would be important for the market because this would continue PAEF's original function of investing in smaller, riskier companies that would not likely receive private equity.
"Micro Fund is the most needed to provide money for small businesses, all the rest they (PAEF) have can be financed by private funds," Engel said.
PAEF will likely sell its assets in an orderly fashion probably in two to three years to get the highest possible price, Buckley said.
