Special situations: IFC launches recovery fund
The International Finance Corporation has launched the first restructuring fund aimed at central and eastern Europe following the economic crisis. The private-sector arm of the World Bank has teamed up with the European Bank for Reconstruction and Development and CRG Capital, a distressed asset specialist, and plans to raise €200 million. The three partners have committed a total of €36 million and hope to bring on board another leading investor within the next couple of months.
The CEE Special Situations Fund will invest across the capital structure of distressed companies in emerging Europe, which has been arguably the region worst hit by the financial and economic crisis.
"While challenging, the current environment provides substantial opportunities to capitalize on throughout the region," says Parham Pouladdej, managing director at CRG Capital, which will manage the fund.
The fund will consider all sectors, although it will steer clear of heavily regulated industries. So it is unlikely to buy banks, although it will look at leasing companies, mortgage firms and other non-bank financial institutions. Its targets will be over-leveraged companies that need to change their business models. The aim will be to seek majority control of its investments and bring in new management, if necessary, to fix the business.