U.S.-based private equity firm Horizon Capital announced that it has closed its third Ukraine investment fund, the Emerging Europe Growth Fund III (EEGF III), at its hard cap of $200 million, exceeding its target of $150 million.
EEGF III was launched with a strategy to back export-focused companies leveraging Ukraine’s cost-competitive standing in food and agriculture, IT, and light manufacturing. Domestically, the fund also pursues investments in the high-growth segments of consumer goods, pharma, healthcare, e-commerce, and financial services. Over the next two-to-three years, EEGF III will be looking to make investments in these areas ranging between $5 million and $20 million each.
Led by co-founding partners Lenna Koszarny and Jeffrey C Neal, and senior partner Denis Tafintsev, Horizon manages more than $850 million in assets from investors representing a capital base of $350 billion. All told, the firm’s three Ukraine funds have invested more than $650 million to date in 140 companies.
This closing of EEGF III represents the largest private equity closing targeting investment in Ukraine in 10 years.
“This fund is a testament to our long-term, valued investor relationships, our strong team of talented professionals and export-focused investment strategy, and our solid track record of successful investing in this country,” said Lenna Koszarny, founding partner and CEO of Horizon Capital. “Since our first close last year, the new fund has already made six compelling investments and will close many more exciting deals in the years to come.”
Launched with an anchor investment from Western NIS Enterprise Fund, one-third of the capital raised for EEGF III originated from institutional investors, foundations, family offices, and other private investors including the EBRD, FMO, IFC, PROPARO, EDG, and IFU. Existing investors from Horizon’s prior funds have provided approximately 55 percent of the commitments, and U.S. and EU-based investors account for about 35 percent of of the total capital raised. The remainder was raised from other international investors.
“Our fundraising success should send a strong signal that Ukraine offers tremendous rewards for those willing to look past the headlines,” said Koszarny.
This statement aligns with sentiments expressed by consultant Michael DeSa, who in the piece Investing in Ukraine: Will Fortune Favor the Bold, written for the GAI Gazette and published in November 2018, said, “Ukraine’s agricultural production capability is often overshadowed by the country’s civil conflict and lack of business transparency. However, a closer look at this strategically-positioned agricultural powerhouse reveals there is ample opportunity for growth to meet the world’s increasing food requirements.”
The vast potential for profit and growth in Ukraine is rooted in the fact that the country is currently not producing near its potential. Given the development and integration of new technologies and the adoption of land reforms, together with Ukraine’s advantageous geographic location, superior soils, large labor pool, and low cost per unit of production, the country poses a channel of opportunity.
“Under Lenna Koszarny’s leadership and with our talented deal partners Denis Tafintsev, Vasile Tofan and Konstantin Magaletskyi, Horizon Capital has reached new heights,” said Jeffrey Neal, founding partner and chairman of the Investment Committee, Horizon Capital. “I am confident in our team’s ability to back visionary founders and deliver solid returns to our investors.”
-Lynda Kiernan