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Fund Profile:
Trans-Balkan SME Equity Fund LLC (TBF)
Sophia, Bulgaria
Zagreb, Croatia
Bucharest, Romania
Website: http://www.seaf.com/transbalkan
Email: not available
Fund Manager: Small Enterprise Assistance Funds (SEAF)
Key Personnel: Robert Webster, Fund Manager
Established: 2000
Total Committed Capital: US $21.8 million
Amount Invested: US $5.5 million (25%)
Shareholders:
International Finance Corporation (IFC)
Black Sea Trade and Development Bank (BSTDB)
Norwegian Investment Fund for Developing Countries (Norfund), Norway
Finnish Fund for Industrial Cooperation (FINNFUND), Finland
State Secretariat for Economic Affairs of Switzerland (SECO)
SEAF Management LLC, via grant from the United States Agency for International Development (USAID)
Geographic Focus: Romania, Bulgaria, Croatia, Bosnia/Herzegovina, and Albania
Background
The SEAF Trans-Balkan SME Equity Fund (TBF) is an umbrella fund for SEAF-Croatia LLC, SEAF Trans-Balkan Bulgaria Fund LLC, and SEAF Trans-Balkan Romania Fund LLC. SEAF had previously held funds in the Balkans, but because of the relatively modest capitalization of these funds, the umbrella fund (TBF) was established to efficiently raise and provide additional equity financing to small and medium-sized enterprises (SMEs) in the Balkans. TBF invests in SMEs operating in Romania, Bulgaria, Croatia, Bosnia/Herzegovina, and Albania (the Region). The Fund primarily purchases equity shares in existing SEAF-managed Country Funds in the Balkans (mainly SEAF-Croatia LLC, SEAF Trans-Balkan Bulgaria Fund LLC, and SEAF Trans-Balkan Romania Fund LLC, comprising about 80% of investments. Secondarily, the Fund makes direct equity and equity-related investments in SMEs in the Region (about 20% of investments). Investments are made in combination with a management training and technical assistance component in order to enhance the business performance of the Fund's investments and to help meet its developmental objectives. The Fund actively assists its portfolio companies in implementing appropriate improvements in management techniques and practices, especially relating to financial control, cost accounting, quality control, and marketing. In addition, the Fund Manager's investment officers are actively engaged in implementing business strategy and in following-up with advice rendered by outside experts. Business support programs are sponsored not only by the Fund, but also by other international and local agencies.
Social Mission
By providing affordable financing to private sector SMEs in underserved markets, the Fund seeks to build the capacity of SMEs to expand production, access new technology, improve competitiveness, reach wider markets, increase profits, and achieve long-term commercial sustainability. By supplementing investments with technical assistance, SEAF aims to help develop business and management skills, improve corporate governance and transparency, and formalize legal structures, business structures, and tax reporting. The development of a vibrant and sustainable SME sector will help to generate new employment, export revenues, and government tax revenues; stimulate economic growth; promote free markets; improve social welfare; and contribute to political stability in developing countries. The Fund also seeks to provide examples of successful private enterprises to entrepreneurs and investors, help SMEs establish new customer and banking relationships with the formal banking sector, create a culture of equity investment, institutionalize investment methods and structures, and help to develop the country's overall financial sector.
Investment Information
Bulgaria (through SEAF Trans-Balkan Bulgaria Fund and directly to SMEs), Romania (through SEAF Trans-Balkan Romania Fund LLC and directly to SMEs), Croatia (through SEAF-Croatia LLC and directly to SMEs), Bosnia/Herzegovina, and Albania By the requirement of Black Sea Trade and Development Bank (BSTDB), a Member of the Fund, at least US $2 million is to be invested in Albania, Romania, and Bulgaria. The Fund invests in enterprises engaged in a broad diversity of sectors, with a special emphasis on companies that are export-oriented and those with strong growth prospects. The Fund will not invest in enterprises engaged in the following activities: banking, insurance, and financial services; speculative investment activities such as real estate or commodities trading; production or sale of tobacco products or hard alcohol; arms manufacturing or other military-related activities; operation of casinos or other gambling-related activities; operation of abortion clinics; or activities harmful to the environment. The Fund also complies with IFC environmental, health, safety, and social policies, such as the following: The Fund will not make investments in entities engaged in forced labor, harmful child labor, trade in certain regulated wildlife products, production of ozone depleting substances or products containing PCBs, drift net fishing, projects affecting indigenous peoples or containing large resettlement components, and projects that pose serious health risks. The Fund adheres to applicable environmental, indigenous people, involuntary resettlement, cultural property protection, occupational health and safety requirements, and child labor and forced labor laws and regulations of the country in which investments are made. The Fund appoints an Environmental Manager, implements an Environmental Management System, and furnishes an Environmental Performance Report. Investments into Country Funds generally range from US $2 million to US $8 million. Direct investments into SMEs generally range between a minimum of US $100,000 to US $500,000, with a maximum investment exposure of US $1,000,00, to obtain a significant minority position in the portfolio company, generally between 25% and 49%. The Fund has no stage or co-investment preferences.
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