USAID-backed vehicle commits $30m to Eastern Europe-focused fund

Late last month, the Western NIS Enterprise Fund (WNISEF), a regional development fund established by the US Agency for International Development, committed $30 million to Horizon Capital’s Emerging Europe Fund III.

EEGF III has a target of $150 million and will focus on the information technology, light manufacturing and food and agriculture sectors of Ukraine and Moldova. Other investors in the fund include the European Bank for Reconstruction and Development; the Dutch development bank FMO; and the World Bank’s private sector arm, the International Finance Corporation.

WNISEF president and chief executive Jaroslawa Johnson told Agri Investor in an email that the export sectors of both Ukraine and Moldova benefit from increasingly-close relations with the EU, lower production costs and depreciating currencies.

Three quarters of EEGF III’s investments are expected to be focused on Ukraine, with export-oriented food processing opportunities as a particular focus, Johnson wrote.

“Food and agriculture exports are one of the most dynamic sectors of Ukrainian foreign trade,” Johnson wrote, highlighting 14 percent annual growth in agricultural exports from the country between 2003 and 2016. “This growth is amplified by increasing demand from the developing world and also improved productivity yields as Ukrainian agriculture companies invest in their sector and the market consolidates”

Johnson wrote that WNISEF hopes that EEGF III can help support the development of export brands in agricultural sectors – such as eggs and poultry – that benefit from Ukraine’s well-established position as a major grain producer.

Agriculture is also expected to be a focus on the fund’s investments in Moldova, which Johnson said has recently expanded its export-oriented walnut, apple and wine industries.

WNISEF is a $150 million regional private equity fund focused on Ukraine and Moldova created by USAID in 1994 that is scheduled to operate through the end of 2023. After investing in numerous regional small and medium-sized businesses, in 2014 USAID narrowed the vehicle’s purpose to promoting economic leadership, local development, social investments and exports.

Horizon Capital was founded in 2006 in collaboration with WNISEF to manage the first iteration of the EEGF, which closed on $132 million that year. The next fund in the series, EEGF II, closed on $370 million in 2008. Horizon maintains offices in Ukraine and Chicago.