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Impact Investing

IPE special report May 2018

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KEVA, AlpInvest in Polish private equity move

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POLAND - Finland's KEVA and the Dutch pension fund-owned AlpInvest are among the institutional backers of a new Polish private equity fund.

Private Equity company Enterprise Investors has announced the closure of its sixth Polish Enterprise Fund.

Out of a total of €658m in investments, €200m comes from pension funds, Jacek Siwicki, managing partner of enterprise investors told IPE.

The money comes from California pension fund CalPERS, AlpInvest, the private equity investment vehicle owned by Dutch pension funds PGGM and ABP, and the Finnish local government pensions institution KEVA.

"CalPERS is a third time investor and both AlpInvest and KEVA invest for the second time," Siwicki says.

CalPERS only confirmed that it is looking at Polish Enterprise Fund VI. "Central and Eastern Europe clearly have attractive economies, and the region promises continued economic growth capable of supporting successful private equity investments," spokesman Clark McKinley commented.

He added that the fund's "investments in Polish Enterprise Fund IV (38.1% net annualized return since 2000) and Polish Enterprise Fund V (20.8% since 2004) have paid off handsomely".

Since its establishment in 1990 EI has raised €1.6bn in a total of six funds. "Fund VI will focus on mid-market leveraged buyouts and on transactions requiring expansion capital", the press release states. About 65% of the capital has been raised in Poland and the rest in the US, UK and Europe with each of these regions taking up a one third share of the 35%.

Polish pension funds are currently not allowed to invest in private equity. However, Siwicki also doubts that there would be much interest at the moment.

One reason is that every six months a benchmark is published and those pension funds that are below it must pay a penalty. "So if a pension fund is locking up parts of its asset in private equity for seven to eight years it will be difficult to reach the benchmark."

There is discussion about excluding private equity holdings from benchmark. Another reason for the low interest is that Polish pension funds are currently yielding good returns from their holdings on the public market and going into private equity would be too difficult", Siwicki said.

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