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These files describes the organizations which have received funding from the budget of the United States government, which is specifically earmarked for co-investment with Russian American Investment Fund and organizations like Palms & Company, Inc. Investment Bankers in Russia and the CIS.
Summary of U.S. Government Sponsored Co-investment Enterprise Funds and Other Investment Funds Focusing on the NIS Region.
As commercial opportunities continue to emerge in the NIS, it is necessary for Palms & Company to develop new and creative means of financing. The U.S. government is responding to these needs by assisting in the development of co-investment enterprise funds. The purpose of these enterprise funds is to address the general unavailability of foreign and domestic capital to private and privatizing firms in Russia and the CIS. When investing in NIS companies Palms & Company seeks co-investment from these funds.
Many private co-investor investment investment funds are also beginning to emerge and express interest in co-investment with Russian Venture Capital Fund of America. Some of these private capital Funds are included on the following list. The list is not comprehensive.
Palms & Company has been in business since 1934 and has developed relationships with 'accredited' and institutional co-investors in 40 countries. This list is in alphabetical order and is for general informational use. The list demonstrates the scale of available capital for investment as well as the scope of potential investment activity in Russia. It does not represent an endorsement of any particular Fund nor any representation that any of these funds would necessarily be co-investors with Palms & Company, Inc., Investment Bankers.Each fund has its own investment criteria and procedures. We can advise you the constructive manner in which to explore capitalization. "Business plans", "Feasibility studies", "Private Placement Memorandum's", "Capital Syndication Prospectus", "Marketing Study", Concurrence Agreements with instrumentalities of the Russian government having competence, and "Financial Projections & Reports" are a necessary part of this process.
A principle element in this Fund's investment strategy is the integration into the investment process of its four Finnish industrial partners - A. Ahlstrom Corp., Neste Corp., Nokia Corp., and the Metra Group. Eligible investment candidates will be private sector enterprises or public sector enterprises soon to privatized.
The Fund makes small early-stage investments in Russian projects and in U.S.-Russian joint ventures.
As of August, 1994, this Fund had raised about $13 million in private funds and anticipated raising an additional $40-50 million. Brunswick acquires majority stakes in small and medium-sized companies through acquisition of vouchers and shares on secondary markets, and maintains active management in its holdings. Brunswick invested the majority of its current capital in heavily-discounted Russian blue-chip companies during the voucher privatization era.
Based in St. Petersburg, CARESBAC was capitalized by the U.S. Department of Agriculture at $3,500,000. To apply, Russian enterprises must obtain a Company Profile form from the St. Petersburg CARESBAC office.
The Central Asian-American Enterprise Fund is being capitalized by the U.S. Government at $150 million over the next three to four years. It will be managed by a private Board of Directors, and will have the authority to make equity investments and loans and offer technical assistance to promote new private companies and entrepreneurs in the Central Asian states, with emphasis on the promotion of small and medium-sized enterprises. In addition, special attention will be given to joint ventures involving regional partners, such as Turkey, India, Israel and Pakistan, though U.S. partners are preferred. The Central Asian-American Enterprise Fund will open offices in the United States, Almaty, and Bishkek.
Established by the Department of Defense under the 1994 Defense Appropriations Bill, the $40 million Defense Enterprise Fund (DEF) will promote private sector investment and restructuring in the Russian defense industry. The Defense Department is establishing this Fund as a non-profit corporation with a board of directors appointed by the President. Investments will be diversified among smaller enterprises or spin-off enterprises derived from larger defense enterprises, large enterprises that have converted or are in the process of converting, and start-ups formed by formerly defense or military personnel. region:Russia, Ukraine, Kazakhstan and Belarus.
The objective of the $300 million EBRD Small Business Fund is to strengthen micro and small enterprises in Russia. Equity finance from this multilateral Fund would be delivered mainly through regional investment companies established with autonomous management structures. The investment companies would utilize a range of quasi-equity instruments to finance enterprises. Ruble finance is available for enterprises with up to 20 employees. Based on the initiative taken at the July Tokyo Summit, G-7 Governments are contributing resources for the capitalization of this Fund; the U.S. contribution is $30 million.
Initially, the EBRD Fund will establish a pilot program to determine the appropriate structure and operation for the expanded Fund. The three regional pilot programs will be established in Tomsk, Tula, and Nizhny
EBRD is capitalizing this fund at $30 million, with additional capital sought from private investors. This Fund will be run by a private western company, currently being selected. The Fund is intended to facilitate modernization, expansion and/or restructuring of privatized enterprises. A key criterion is strong management.
Russian voucher investment fund that invested in Russian companies. Bought and sold privatization vouchers.
FIRST NIS FRONTIER FUND
OPIC will provide a loan guaranty to Baring International Investment Management Ltd. to manage the First NIS Frontier Fund. This Fund is expected to raise at least $100 million. This Fund will take equity positions in new or expanding companies of various sizes engaged in the sectors listed below. Arthur A. Hartman, former Ambassador to the Soviet Union, will be the chairman to the Fund. Sovlink-American Corporation, a business advisory firm, will serve as investment advisor for the Fund, with Tokobank, a Russian bank, serving as consultant and S.G. Warburg Securities as the placing agent. The First NIS Frontier Fund anticipates beginning operations within 6 to 12 months (as of 10/94).
London-based Fleming Investment Management, Ltd. has announced the launching of this closed-end Fund to invest in shares of newly-privatized Russian companies. Brunswick Investment, Ltd. will act as advisor to Fleming on the Fund.
The Framlington Russian Investment Fund is a private, London-based investment Fund targeted at Russian joint ventures. It was capitalized in January, 1994 with $65 million ($16 million from EBRD, $8 million from the World Bank, and the remainder from U.S. and pension funds). 80% of the funds invested in the first year will go to companies with largely western control, however, projects will include those with western minority shareholders . The Bank of Austria, Smith New Court, and CCF Elysees Bourse are the agents for this London based Fund.
Capitalized by the U.S. Government, the Fund for Large Enterprises in Russia significantly fulfills the U.S. commitment to provide equity to the Special Privatization and Restructuring Program, adopted at the July G-7 Summit in Tokyo. The Fund for Large Enterprises in Russia is intended to provide urgently needed equity capital to medium and large Russian companies emerging from the mass privatization program underway.
Like the Russian-American Enterprise Fund, the Fund for Large Enterprises in Russia is a U.S. not-for-profit corporation governed by a U.S. board of directors, appointed by the President, and managed by a team of financial experts selected by the board. President Clinton has appointed W. Michael Blumenthal as chairman of board of directors. The Fund will operate in specific regions to be determined by the Board and in parallel with equity funds to be established jointly by other G-7 donors, EBRD, and the International Finance Corporation. The U.S. Government will capitalize the Fund at $100 million this fiscal year. With a proposed capital-recovery guarantee from OPIC, FLER will be expected to raise private capital on its own.
Particular attention will be given to enterprises that occupy key positions in the Russian economy (determined by size, employment, and strategic significance), as well as potential investments considered too risky by other private investors, due to lack of a track record or the political and economic environment in which they operate.
Junction Investors Ltd. (JIL) is a private investment and capital company. JIL provides management assistance when necessary, as well as arranges for additional debt and equity funding if needed. Preferred investments are small to medium-sized businesses with long-term growth potential.
The Fund for Democracy and Development, a non-profit organization, created this for-profit subsidiary as part of its Russian Commercial Bank Development Project. The NRSBIF's initial capital is being provided by the U.S. Department of Agriculture and its initial operating costs are being covered by U.S.A.I.D. Additional capital will be raised from private sources.
The NRSBIF will offer financing to small and medium-sized businesses. through Russian banks that are or plan to be "active in the small business sector." Initially financing will be in rubles, but the Fund hopes to eventually offer dollar financing. With a base of operations in Moscow, the NRSBIF plans to work with banks in at least four or five cities and to add other cities over the next few years.
This company manages four investment funds operating in the region through the New Century Holdings Group. The group generally seeks to be an active shareholder in its holdings.
The New Europe East Fund, managed by Capital International (London), is capitalized at $150 million to invest into projects in Eastern and Central Europe and the former Soviet Union. EBRD invested $25 million into the Fund. They will consider investing in new or existing large joint ventures with reputable western industrial partners.
Newstar is a merchant bank capitalized by AT&T and GM pension funds. Preferred candidates are private, small to mid-sized manufacturing enterprises that include a western partner.
The Overseas Private Investment Corporation (OPIC) has provided a $75 million loan guaranty to Paine Webber to help establish the Russian Partners Fund (RPF). It is expected to be capitalized at about $105 million, with funds coming from a variety of private sources. Notably, the Russian government has provided $5 million of this total, and has given OPIC a $20 million "back-door" guarantee to help lower OPIC's exposure on its guarantee to Paine Webber.
Whenever possible, the Paine Webber Russian Partners Fund directors will attempt to use their investment to leverage loans from other sources, such as EBRD or the IFC.
The Pioneer Fund was capitalized at $3 million as of January 1994, but U.S.-based Pioneer Group expects the Fund to be as large as $100 million within a year. It has established a management arm in Russia in conjunction with the Transitional Economy Institute and Association of Privatized and Private Companies. Pioneer will look into long term projects with export potential.
The Russian-American Enterprise Fund is currently in operation, and is being capitalized by the U.S. Government at $340 million over a three-year period, with the expectation that the Fund will become self-financing thereafter. The Fund is governed by a U.S. Board of Directors, chaired by Gerald Corrigan.
The Fund has an office in Moscow and plans to open one in the Khabarovsk. $40 million has been set aside for its operations in the Russian Far East. It is anticipated that the Fund will attempt to diversify its portfolio as quickly as possible, both in terms of geographic regions and industry sectors. Additionally, the Fund has a Small Loan Program, in which Russian banks make loans of between $5,000 and $100,000 of
RARE is a limited partnership operated by the New-York based Providence Capital. RARE invests in small to mid-sized businesses with both strong short-term profit potential and long-term growth potential. region:Russia.
Lehman Brothers will manage the $300 million Russia/NIS Major Projects Fund, which expects to begin operating in six to twelve months (as of 10/94). While the Fund will be capitalized by private investors, OPIC is guaranteeing 75% of the capital.
Sector Capital works with Russian allies to provide investment banking services, seed capital and co-financing.
Managed by Palms & Co., this Fund will co-invest as a passive investor alongside other funds. The focus is on projects with strong western participation. This Fund may invest in western partners to enable them to meet co-investment requirements of some government agencies and institutional investors.
Run by Siparex, a French firm, this Fund will concentrate on facilitating modernization, expansion, and/or restructuring of privatized companies.
The Fund is capitalized by EBRD at $12 million.
EBRD is currently negotiating with prospective western Fund managers. The Fund will concentrate on facilitating modernization, expansion, and/or restructuring of privatized companies. It is currently capitalized at $30 million.
This Fund makes venture capital investments in private Ukrainian companies. Ukrainian nationals should have a sizeable share of the venture. The Fund is capitalized at $12 million.
Flemmings Management Corporation will run this Fund, which will make investments in small and mid-sized businesses. The Fund will concentrate on facilitating modernization, expansion, and/or restructuring of privatized companies. It is currently capitalized by EBRD at $30 million. region:Sverdlovsk, Perm and Chelyabinsk Oblasts, Russia. investment type:Equity, some technical assistance. project size:$300,000 to $3 million. restrictions:No hard liquor, tobacco or firearms. Peter Stredder
The Western NIS Enterprise Fund is capitalized by the U.S. Government at $150 million, and will focus on small- to medium-sized enterprises in Ukraine, Belarus and Moldova. It will most likely function in a manner similar to the Russian-American Enterprise Fund, but details are still being worked out. Glen H. Hutchins, former Managing Director of the Thomas E. Lee Company, will be the Chairman of the Fund. Offices will be set up in Minsk, Kiev and Chisinau in coming months.
To prepare proposals and develop strategy for such capitalization activities contact:
For discussions in Russian language in Moscow 7-095-324-5443 ,Alexander Wilobokov
For discussions in Russian language in Moscow 7-095-324-5443, Alexander Wislobokov
For discussions in Russian language in United States of America, Washington D.C., Tel: 1-703-818-0508 Fax: 1-703-818-00236 , Email: sanich@juno.com Alexander Goldenberg
For discussion in English or Dutch: 1 425 828-6774 E-mail: palms@PeterPalms.com Dr. Pyotr Joannevich van de Waal-Palms
Offices in Vilnius Lithuania E-mail serg@novatex.lt,
Grigorij Kolesnikov
2012 Vilnius, Zirmunn 58-41, Fax: 3702 52-54-40 Tel: 3702 72-11-34
Other e-mail: root@gigrin.aiva.lt or novatex@taide.lt
Offices in Gomel, Belarus: David Sticknety, E-mail david@belarus-online.com
IAEWP I.L. U.N. P.O. Box 97 Gomel 246050
Tel: 375-232-54-4404, Pager (Russian only) 375-232-53-9130 - A770
Office in St. Petersburg: Tate Ulsacker, Dun & Bradstreet Nord, Tel: ( ) , Fax ( ) E-mail <idcinfo@cityline.ru palms@m16.medport.ru
UKRAINE Oleg Jourin PhD
P.O. Box 25 Lutsk-23 City Volyn Region, Ukraine 262023
Tel: 380-3322-45521 Fax: 380-3344-30631
http://www.theoffice.net/patron
E-mail: patron@theoffice.net
Arunas Siaulys E-Mail: arsiau@org.ktu.lt Verkiu str. 32/70 Lt-3035 Kaunas, Lithuania Phone: 370 7 74-23-85 Fax: 370 7 79-97-86
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Date Last Revised: Sept. 9, 1997