Strategy
BARING VOSTOK’S FUNDS
primarily invest in market-leading, later-stage companies that are often facing challenges due to a combination of rapid growth and increased competition. Each company is different and each faces different challenges; our goal is to be an owner that helps provide the conditions necessary for managers to thrive.
PARTNERSHIP APPROACH
Baring Vostok does not typically assume operating roles in portfolio companies, since it prefers to invest in companies with strong existing management teams. Baring Vostok group companies employ many forms of shareholding control and support including working with managers to design strategies for growth, identifying and helping facilitate the acquisition of other businesses by portfolio companies, implementing long-term management incentive programmes, and helping to attract debt and equity financing at various stages of business development. Many of the former and current portfolio companies have successfully listed shares on international stock exchanges and Baring Vostok team members have played an active role in helping to prepare for and facilitate the IPO process.Six funds in 20 years
Committed Capital, $
160 mln1994
FNIS
FNIS
15 mln1999
FNIS RF
FNIS RF
205 mln2001
BVPEF
BVPEF
413 mln2005
BVPEF III
BVPEF III
1100+302 mln2007
BVPEF IV
+Supplemental Fund
BVPEF IV
+Supplemental Fund
1273+212 mln2012
BVPEF V
+Supplemental
Fund
BVPEF V
+Supplemental
Fund
CAPITAL AND INVESTMENT SIZE
Baring Vostok Private Equity Fund IV, established in 2007 with a total of $1.4 billion of committed capital from investors, has recently finished making new investments and its portfolio consists of approximately 16 companies. Baring Vostok Private Equity Fund V has recently finished fund raising and secured capital commitments of $1.5 billion in aggregate. Fund V has started its investment period and is targeting investments ranging in size from $30 million to $200 million in each company.Over the years the Group has focused in four sectors
By sectors, %
Baring Vostok’s funds take a flexible approach to ownership of portfolio companies, investing as a minority investor, a control investor, and sometimes as part of an investment consortium in which no one party has majority control. More important for the funds are the company’s growth potential, the robustness of its business model, the strength of its management team, and the alignment of all partners’ interests.
Baring Vostok’s funds have traditionally focused on four broad sectors of the economy which it believes offer the most attractive opportunity set of investments in the mid-market. Having worked over the last 18 years together with many of the leading Russian and CIS companies in these sectors, Baring Vostok’s team has a deep understanding of the major trends driving development, and has created a network of some of the most successful entrepreneurs and managers across the region. Baring Vostok’s staff regularly analyse these sectors, as well as new emerging segments of the economy, allowing the Funds to present managers and owners of businesses with decisive solutions to their financing requirements.
TEN KEY INVESTMENT CRITERIA
- Strong management team with economic incentives aligned with investors and a common vision for the future.
- Straightforward, realistic and sustainable business plan.
- Barriers to entry, such as long-term licensing, established brands and high replacement cost of assets.
- Leading market position of the company in the industry, market niche or region.
- Ownership structure ensuring investors’ control over proceeds from the company’s activities.
- Potential for funds to add value to the company.
- Constructive relations with federal and local authorities.
- Clean balance sheet with limited debt, and balanced foreign currency exposure.
- Positive operating cash flow or ability to attain it within 12 months of investment.
- Reasonable entry valuation which allows the Funds to achieve a high return on capital under realistic long-term scenario.