Horizon Capital was set up in 2006 by Lenna Koszarny and Jeffrey C. Neal. The objective was to create an independent management company dedicated to investments in SMEs in Ukraine. Horizon Capital was originally a spin-off of the WNISEF fund, a USD 150m vehicle set up by USAID in 1995.
In 2006, the manager raised the EEGF I fund, with a size of USD 132m, then EEGF II in 2008 with a size of USD 370m. The political and macroeconomic context has delayed the raising of the successor fund EEGF III by several years pending a stabilization.
PROPARCO is investing USD 12m alongside the main development finance institutions (DEG, EBRD, FMO, IFC).
EEGF III is an investment fund managed by Horizon Capital, whose team is based in Kiev. It targets equity investments in Ukraine on the medium-sized SME market. The fund will almost exclusively be seeking opportunities in Ukraine (min. of 80% of commitments).
EEGF III will also be pursuing an opportunist strategy in Moldova, a country in which the manager has extensive experience and whose market characteristics are similar to Ukraine, with a great openness of local SMEs to export markets.
The investment strategy will mainly focus on: (i) companies targeting the export market (minimum of 2/3 of commitments) and (ii) domestic companies which are leaders in their sector on a niche market (maximum of 1/3 of commitments).
The project involves supporting the only equity fund in Ukraine which supports companies with strong potential.
From an economic perspective, the fund is planning 12 investments, 7 of which could concern SMEs for a financing volume of some EUR 44.8m, as well as start-up enterprises (a maximum of 7), for a financing volume of EUR 22.4m.
The project will help create or maintain 45 direct jobs in the fund and 4,800 indirect jobs in the companies invested in.
It thereby provides a response to the issue of the inclusion of the poorest populations by supporting employment in sectors affected by the crisis, especially IT services where a large number of graduate engineers find themselves jobless every year.
The fund is also involved in the companies invested in, in particular in their governance in order to improve practices and lay the foundations for solid growth.
Finally, the companies invested in by the fund will contribute to Ukraine’s tax revenues (estimated at an annual average of EUR 2.4m) and the country’s exports.