Business news from Ukraine

Investment company Horizon Capital has raised $254 million in a new fund for Ukraine

29 April , 2023  

Kiev-headquartered investment firm Horizon Capital has raised $254 million in a new Horizon Capital Growth Fund IV (HCGF IV, the “Fund”), exceeding its $250 million target, the company said in a statement Friday evening.

“Today Horizon Capital and our esteemed group of investors made history as the first and largest fund raised since the start of a full-scale invasion,” the statement quoted company founder and CEO Olena Kosharnaya as saying from a private signing ceremony with Ukrainian President Volodymyr Zelensky and international investors from the United States, EU and international institutions.

In January this year, she told Interfax-Ukraine news agency that after raising $125 million in the first round of HCGF IV formation in September last year, it was planned to increase its size to $200 million by the end of March, and tentatively by mid-summer to completely close the formation of the fund in the originally planned amount of $250 million.

As noted in the message of the International Finance Corporation (IFC), which contributed $30 million to the fund at the initial stage of its formation, it has increased its contribution to $60 million, becoming the largest participant in the fund.

“We urge other investors to follow IFC’s lead and not let the newspaper headlines fool you. Financing sectors that others are hesitant to invest in can create tremendous investment opportunities with equally significant potential returns,” Kosharna said.

Among the new investors in HCGF IV, according to releases by Horizon Capital and the European Bank for Reconstruction and Development (EBRD), the Société de Promotion et de Participation pour la Coopération Économique (Proparco), the U.S. International Development Finance Corporation (DFC), Swedfund International AB (Swedfund), the Finnish Industrial Cooperation Fund (Finnfund) and the Danish Investment Fund for Developing Countries (IFU).

“In the context of the war with Ukraine, HCGF IV’s ambitions are unprecedented, and we are encouraged by its fundraising success,” Hassan El Khatib, managing director of equities, said in an EBRD release.

In addition to the EBRD, which contributed $40 million to HCGF IV in the first phase, its investors also included Deutsche Investitions-und Entwicklungsgesellschaft (DEG) and its subsidiary KfW Group, the Dutch Enterprise Development Bank (FMO), the Swiss Investment Fund for Emerging Markets (SIFEM) ), Western NIS Enterprise Fund and Zero Gap Fund, formed in collaboration between The Rockefeller Foundation and John D. and Catherine T MacArthur Foundation.

“The fact of exceeding the original ambitious goal of $250 million demonstrates a high level of investor interest in attractive opportunities in high-growth, high-impact technology and export-oriented companies, including those in the light and food processing, innovative consumer products, fintech, etc. sectors,” noted Horizon Capital.

It is also noted that HCGF IV was the first fund in Central and Eastern Europe (CEE) and one of about ten funds in the world to achieve 2X Flagship Fund status, including one of only two that are founded and led by women. The 2X Challenge was launched at the 2018 G7 Summit as a bold commitment by companies to invest in women in the world and promote gender equality in finance.

IFC specified that the fund would invest $10-30 million to acquire minority stakes in 10-15 mid-cap and $50-150 million companies in Ukraine and Moldova. HCGF IV is the $200 million successor to EEGF III, which was completed in 2017, and will follow a similar investment strategy focused on IT services and products as well as e-commerce, innovative consumer products and fintech, according to corporate materials.

IFC recalls having invested in EEGF III and EEGF II (2008), while EBRD was an investor in EEGF III and EEGF II as well as HCGF II.

Horizon Capital is a large investment company managing 6 private equity funds (more than 40 institutional investors) with assets of $1.4 billion, among which are WNISEF ($150 million), Emerging Europe Growth Fund (EEGF, $132 million), EEGF II ($370 million) and EEGF III ($200 million), as well as HCGF II ($258.3 million). The funds of these funds were invested in more than 160 companies, which employed more than 77 thousand people, in Ukraine and Moldova.