05 Jul SEAF Establishes Fund to Invest in Small Enterprises in Central Asia
The Small Enterprise Assistance Funds (SEAF) today announced the first closing on a fund that will invest exclusively in small and medium enterprises in Central Asia. The Central Asia Small Enterprise Fund represents a partnership among SEAF, the Swiss Government’s State Secretariat for Economic Affairs (SECO), the International Finance Corporation (IFC) of the World Bank Group, and the U.S. Agency for International Development (USAID). These institutions have teamed up to invest in and provide grant funding for technical assistance to growth-oriented small enterprises that SEAF will identify in the region. SEAF President and CEO Bert van der Vaart signed the fund documents on behalf of SEAF in Tashkent, Uzbekistan at a ceremony chaired by Swiss Ambassador Wilhelm Meier, and attended and addressed by U.S. Ambassador Herbst, the World Bank Regional Representative David Pearce, and the Regional Representative of the Eurasia Foundation Jon Thiele.
The Fund, which will be officially known as the SEAF Central Asia Small Enterprise Fund, will be managed by SEAF’s Donald R. Nicholson. Mr. Nicholson was SEAF’s first president, and has had extensive experience in the region. Together with deputy director general Brian Quigley, Mr. Nicholson has already begun to identify potential small business investments. Initially, the fund will have offices in Tashkent and Almaty, Kazakhstan. The Fund will also invest in the Kyrgyz Republic, and will monitor developments in Tajikistan and Turkmenistan as well. SEAF expects that the first closing at U.S. 8.6 million will be followed by additional capital from other investors interested in participating in the economic development of the region.
The Fund’s developmental objective is to promote political and economic stability through the efficient provision of financing and business support to growth-oriented SMEs in Central Asia. The Fund seeks to achieve long-term capital growth by making direct equity, equity-related debt, and leasing investments in individual portfolio companies in the region. As with other SEAF-managed funds, the Fund will seek to enhance the business performance of its investments by actively assisting 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’s investment officers will be actively engaged in implementing business strategy and in following up on SEAF’s own experience as investor in more than 195 SME investments throughout the world, and on advice provided by outside experts arranged for by SEAF.
The Fund will generally look for investment opportunities between a minimum of 150,000 USD and 800,000 USD. The Fund will invest in SMEs that (i) have between 10 to 100 employees (ii) are majority owned by residents in the region, and (iii) are 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 seek to obtain a significant minority equity position in the portfolio companies, generally between 20% and 49%.
From its inception in 1989 as an arm of the humanitarian organization CARE, SEAF (www.seaf.com) has evolved into an international venture fund management firm focusing on SMEs in emerging markets. Headquartered in Washington, D.C., SEAF has developed a worldwide network of emerging market funds, with 10 other funds currently under management in a dozen countries throughout Central and Eastern Europe, Latin America, and Asia. SEAF has managed over $150 million and made more than 195 investments worldwide. It has achieved 31 exits from its investments at a weighted average IRR of 30%. SEAF’s aim, which is shared by the investors in this and its other SME funds, is to help stimulate strong and sustainable growth by SMEs in developing and transition countries, thereby speeding up their integration into the world economy, while providing both a reasonable return to its investors and much needed revenue and employment generation in the countries of operation.