American SEAF fund offers capital increase for firms in Serbia – Local companies provided with up to EUR 1, 5 m

SEAF Opportunity Serbia Fund, headquartered in Washington, offered to Serbian privately-held companies the option of capital increase as an alternative way of funding fast business development.

The Investments Manager at SEAF Opportunity Serbia Fund which has been set up in September this year, Djordje Bajovic, said at the Chamber of Commerce of Belgrade that new fund for Serbia has EU 10 m and that the funds is planned for investments though capital increase, i.e. convertible loans.

- Capital increase is carried out solely through minority investments, 49% of stake most. The idea is that companies with these assets and support they receive through training and management support generate growth and becomes ready for sale in the next step to a strategic investor or a financial partner or that a company as a majority owner acquires our stake later – Bajovic said for Tanjug.

He said companies operating in different fields can turn to a fund and mentioned that the ones in agriculture, processing industry and services are especially interesting for them.

- We invest in private companies whose owners are Serbian residents. A company can have two to three owners but only one owner is an ideal situation for us – Bajovic said and added that the objective of SEAF fund is development of private entrepreneurship in Serbia.

Since funds are poured in company capital and since traditional guarantee assets are not essential as the ones required when it comes to banking loans, that kind of capital shares the company’s destiny and has a strong interest in fast company development.

Therefore, private equity funding is specifically convenient for companies in development due to their limited access to capital sources and to expertise which private equity funds can provide.

Bajovic said a company can get EUR 1, 5 m maximally and it should have10 to 250 people, an annual profit between EUR 200.000 and 15 m, as well as that it is export-oriented.

Bajovic reminded SEAF Fund has been operating in Serbia since 2006 and that through its first fund in Serbia it poured EUR 10 m in local companies through capital increase. For instance, the fund acquired 35% stake at Zrenjanin-based Gomex.

The acting general secretary at the Chamber of Commerce of Belgrade, Aleksandar Milosevic, said for Tanjug that the chamber helps their members to improve business and that private SEAF fund pours in SMEs which have fast growth potential and they lack financial assets.

SMEs can get funds with certain interest rates which can be avoided through SEAF fund, Milosevic said.

SEAF fund in USA was set up in 1989 and now it has capital of USD 600 m. It has 25 active funds in 21 countries worldwide with investments in 400 companies. Financial institutions such as USAID, IFC, EBRD and others invest in the fund.

SEAF Opportunity Serbia Fund headquartered in Washington, has a branch office in Belgrade.