Eurasia Capital Management (ECM) has created the first-ever Uzbekistan-dedicated hedge fund. The Uzbekistan Growth Fund was launched in September with initial capital of just $5 million but ECM founder and managing partner Alisher Ali Djumanov believes that the open-ended investment vehicle could grow substantially over the next couple of years.
"We think that there are at least $100 million of potential projects out there," says Djumanov. "We can have a meaningful impact in Uzbekistan with this dedicated country fund." The new fund will invest across a variety of asset classes, giving investors broad-based exposure to the Uzbekistan economy. "There is clear upside potential to Uzbekistan, it could be a $100 billion economy versus the $20 billion one it is now," says Djumanov. ECM will focus on five main areas. The first will be what Djumanov terms credit opportunities. "We are looking to take advantage of the lack of availability of bank financing in Uzbekistan – even major exporters struggle for working capital," he says.
Djumanov believes that ECM will be able to originate deals offering 20%-plus yields, with downside risk mitigated by being backed by property or other receivables or the option to convert the debt into equity stakes.