SigmaBleyzer comes to Romania

by Ana-Maria Gavrila

With Romania getting a new image boost last week, as Standard & Poor's upgraded the country rating to an investment grade, local investment funds make room for a new player.
Following years of success in neighboring Ukraine, US-based SigmaBleyzer widened its reach by establishing its fourth fund; SigmaBleyzer Southeast European Fund IV (SBF IV). The fund is aimed at attracting businesses in Romania, Ukraine and Bulgaria.
According to Michael Bleyzer, president of the group, the fund to date has secured 51 million Euro. "Our target is to reach a capitalization of 200 million Euro. Should we find good business potential, the investors might even put in 250 - 300 million Euro."
Cristian Nacu, vice-president of Enterprise Investors, welcomed the move, already anticipating competition on some deals.
Asked about the challenges an investment fund faces in Romania, Nacu underlined the necessity of knowing the market very well.
"Also, there is still certain reluctance from local entrepreneurs concerning the advantages of having an investment fund develop businesses. But things are getting better, as there is more understanding year after year on what such an input means."
Radu Bugica, SigmaBleyzer manager for Romania, told BBW that investments would focus on IT and telecommunication, retail and distribution, food and consumer goods, as well as pharmaceutical and health.
"We are mainly considering projects of five to 40 million Euro, but there might be cases when we approve smaller investments."
The first transaction in Romania is expected by the end of the year, or by the first quarter of 2006.
"Romanian companies must compete to attract investors," Bleyzer added. "We are currently looking at more than 170 companies for potential investments and we will pick the most attractive ones."
Established in 1993, SigmaBleyzer created its first fund three years later, with investors coming from Western Europe and the United States. The group has gained experience by operating three funds in Ukraine. According to the group's website, SigmaBleyzer has invested 100 million Euro in the Ukrainian funds, the value of which it claims to have doubled in the meantime.
"Romania, along with Bulgaria and Ukraine, represent a unique opportunity for three-dimensional expansion," Bugica said. "First of all, through turnover increase as a result of fast macroeconomic development. Second of all, due to the possibility of improving operational performance, resulting in net profit growth."
The imminent EU integration is another factor weighing in Romania's favor.
"Investment funds have the role of purchasing companies and helping them grow and adapt to market conditions, then selling them to strategic investors," said Bleyzer, adding that Romania still has problems in attracting strategic investors. "The business environment is still unstable; corruption is at a pretty high level, while companies are not very attractive."