CCP Capital Launches First Private Fund for Croatia

Croatia’s first private sector venture capital fund has been launched as the country embarks on a programme of rapid economic reconstruction. The Adriatic CCP Fund, which will invest both in existing private sector SMEs and in privatisations, is a joint venture between the EBRD, Zagrebacka Banka, one of Croatia’s leading commercial banks, CCP Capital and sponsors Fulton Prebon.

CCP Capital was formed by Neil Balfour, Keith Mellor and Neil Milne, who have gained substantial experience investing in Central Europe via the Poland Investment Fund.

Adriatic CCP Advisers, a wholly-owned subsidiary of Jersey-based CCP Capital, will advise the Adriatic CCP Fund.

Further regional expertise will be provided by Zagrebacka Banka, and by Adriatic CCP chairman Ante Cicin-Sain, an economics professor who is a former governor of the Central Bank and Croatia’s Ambassador to London. Arthur Hughes, chairman of fund sponsors Fulton Prebon, also has close ties with Croatia.

The Adriatic CCP Fund, which aims to raise up to $30 million (ecu 27 million), was launched with $15 million in initial capital from the joint venture partners, of which EBRD contributed $5 million. Neil Balfour of CCP Capital, who will chair the fund’s supervisory board, said financial institutions in Italy, Austria, Germany, Switzerland and the UK will be primary marketing targets for the fund, though CCP Capital may also try to tap US funding sources. CCP Capital hopes to close the fund before the end of May 1998.

Advent International, now raising a second fund for Central Europe, and CCP Capital plan to establish an exclusive co-investment agreement in Croatia, replicating their existing co-operation in Poland. Such an agreement would give the Adriatic CCP Fund, which on its own account will target investments of $500,000 to $1.5 million, potential exposure to larger deals.

Neil Balfour said that, although it is too early to predict the sectoral distribution of the fund’s portfolio,”obvious sectors the Adriatic CCP Fund will be targeting include food, distribution/warehousing and tourism”, but he stressed that the managers would keep an open mind and assess investment opportunities across the entire industrial spectrum.

The fund, which will open a Zagreb office during December, will shortly be operational, and expects to make its first investments by spring or early summer.