EBRD commits €40 million to Avallon fund for central and eastern Europe SMEs

EBRD commits €40 million to Avallon fund for central and eastern Europe SMEs
EBRD boosts SME funding

Private equity fundraising remains constrained across central and eastern Europe as smaller companies seek longer-term capital to expand and improve operations. The EBRD is committing up to €40 million to Avallon MBO Fund IV, with most of the fund's investment expected to be directed to Poland.

Highlights

  • EBRD has committed €40 million to Avallon MBO Fund IV to support SMEs and small mid-cap companies in Poland and central/eastern Europe.
  • Avallon MBO Fund IV is targeting €220 million in total commitments with a maximum fund size of €260 million.
  • At least 70 percent of the fund's capital will be invested in Poland, with the remainder allocated across 10 other central and eastern European countries.

Fund structure and investment focus

As reported by the EBRD, the investment in Avallon MBO Fund IV is intended to support small and medium-sized enterprises and small mid-cap companies in Poland and elsewhere in central and eastern Europe. The bank says the funding will promote private enterprise, encourage management ownership and help portfolio companies build operational capacity, innovate and grow.

Avallon MBO Fund IV is targeting total commitments of €220 million and has a maximum size of €260 million. At least 70 per cent of the fund's commitments are set to be invested in Poland, while up to 30 per cent can be allocated across Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Romania, the Slovak Republic and Slovenia.

The fund is building a diversified portfolio of equity and quasi-equity investments in SMEs and small mid-caps, providing long-term capital designed to help businesses scale up and improve competitiveness.

Our earlier report on Pakistan’s push to expand priority-sector lending outlined government targets to raise credit for housing, agriculture and SMEs by 2027, alongside steps to speed up approvals and simplify requirements. The article also described planned regulatory and risk-sharing measures to strengthen banks’ capacity and widen access to formal financing, with incentives tied to banks’ performance in these segments.

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