SEAF Macedonia II Fund

The Fund’s objective is to promote political and economic stability through equity financing and business assistance to growth-oriented small and medium enterprises (SMEs). More specifically, the Macedonia II Fund seeks to achieve long-term capital growth by making direct equity and quasi-equity (mezzanine) investments in individual portfolio companies in the Republic of North Macedonia. The Fund was launched in partnership with Macedonia2025, a group of successful North Macedonian Diaspora committed to improving the entrepreneurial environment, economic development, and education in North Macedonia.

Investment Strategy

• The Fund seeks to address the significant gap that exists in risk capital financing available to SMEs in North Macedonia. 
• The Fund strategy is to provide early-stage and expansion capital to growth-oriented companies across a variety of sectors, providing investors with a diversified portfolio of investments designed to profit from Macedonia’s growth.
• Consistent with its prior experience in North Macedonia, SEAF has identified a range of attractive, largely domestic-demand driven sectors for investment with potential for strong domestic growth and potential regional scale. Targeted sectors include agribusiness, light manufacturing, consumer goods, information and communications technology (ICT), and clean and efficient energy tech. SEAF will also invest in domestic companies providing products or services to an increasing number of multinational enterprises (MNEs).
• As with all SEAF funds, SEAF actively partners with portfolio company management to improve financial controls, corporate governance, marketing, human resources management and operational efficiency—business operations which, in SEAF’s experience, are generally underdeveloped in most early-stage companies, yet vital to scaling growth.

Investment Thesis

• In 1999, SEAF launched its Macedonia I Fund as the first risk capital fund in the country with the objective of investing in SMEs. Despite the investment period taking place during an internal conflict in the country, the fund provided adequate returns. Since then, gains on investments were redeployed into a local CEED center and a follow-on regional fund, the SEAF South Balkan Fund. By collaborating with CEED, SEAF’s non-profit subsidiary, the fund is able to source investment opportunities in an efficient manner while CEED provides over 600 entrepreneurs with deep insight into North Macedonia’s economy and enterprises.
• As an upper-middle-income country, North Macedonia has made noteworthy efforts in reforming its economy over the last decade. The country has focused been on increasing competitiveness, fostering a favorable environment for local businesses, and creating more and better jobs, and encompassing the entire population in future growth.
• In 2014, while Central and Eastern Europe were slow to recover from the 2008 crisis, North Macedonia emerged as one of the more promising economies.  The country achieved an annual GDP growth rate of 3.2% for the final quarter of 2013, bolstered by its service sector and textile industries.  The SME sector, in particular, is vital to the economy as it comprises more than approximately 98% of all the active companies in the country and is regarded as a driving force of the overall economic activity, according to Macedonian State Statistics Center.
• With high unemployment still hampering further advancement of the economy, it is vital that SMEs in North Macedonia are supported through financial and advisory means in order to decrease joblessness and, in turn, increase spending.
• SEAF’s continued presence in North Macedonia, and the Balkans in general, demonstrate the commitment to the Region and the belief in the growth potential of SMEs, and provide the investment experience and personnel needed for continued investment and development in 2020 and beyond.

Local Team