The European Bank for Reconstruction and Development (EBRD) is contemplating a €40 million investment in Mezzanine Management’s soon to be launched fourth fund targeting junior debt in Central and Eastern Europe.
Titled Accession Mezzanine Capital IV, the fund is understood to still be in the pre-marketing phase, but the EBRD said that the targeted final close is €250 million.
Mezzanine Management declined to comment.
If the EBRD agrees to take the plunge, it will be the third time the organisation has invested in Mezzanine Management’s funds. Previous investments include a €50 million and €40 million in funds three and two, respectively, according to PDI figures. Other investors in the previous fund include the European Investment Fund and the European Investment Bank.
“The proposed project will expand the mezzanine fund market with a sustainable team of investment professionals with experience and long-term market practice. It will continue the development of the mezzanine structured finance products; and will contribute to the availability of long-term financing for small and medium-sized enterprises and mid-market companies by mobilising additional capital for its investment region,” a statement from the EBRD said.
Franz Hoerhager, founding partner of Mezzanine Management, which is headquartered in Vienna, spoke at the PDI Germany forum last month about the number of opportunities in this region so far untapped by many alternative lenders. In Bulgaria and Romania, for instance, Mezzanine Management has obtained returns of between 18 and 20, while in Poland and the Baltics the IRR has been 15 percent.
While the region does not offer the huge ticket sizes that a number of the biggest funds in Europe look for, it has an abundance of opportunities as banks retreat from lending to focus on their bigger clients, Hoerhager told the audience at the forum.