News and Analysis
The Bulgarian Fund of Funds launched a public tender for selecting fund manager of the Mezzanine / Growth Fund with public resources of 38.5 million euros
The funds are targeting small and medium-sized enterprises with growth potential
The Bulgarian Fund of funds launched a public tender for selecting a manager of the Mezzanine / Growth Fund (MGF). The public contribution amounts to EUR 38.5 million and comes from the Operational Programme „Innovation and Competitiveness “2014-2020, co-funded by the European Regional Development Fund. The financial instrument will attract additional private funding of at least EUR 16.5 million.
The MGF supports the development of the competitiveness of Bulgarian SMEs in a mature development phase. It will provide access to alternative financing for SMEs with growth potential and plans to expand and improve operations, enter new markets, and develop new products and services. Ticket sizes in each final recipient range from EUR 2.5 million to EUR 7 million.
The implementation of the financial instrument will lead to an increase in the productivity and export potential of the Bulgarian SMEs. Along with the business objectives, the instrument will also focus on the development of management capacity and corporate governance of the funded businesses.
Type of investments allowed under MGF are in the form of equity and quasi-equity investments, a substantial part of which will be provided in the form of mezzanine financing.
Mezzanine is a form of quasi-equity investment, falling between equity and debt financing. In general, it provides an opportunity for enterprises to attract risky financing without necessarily transferring a substantial share of their ownership to the new investor.
The investment period of the MGF is 5 years with a ten-year fund duration. Extension option is provided for up to two years.