Private Equity Programme
Under its Private Equity Programme, the Fund takes significant or controlling stakes in companies operating primarily in Romania, Serbia, Bulgaria and neighbouring countries (the “Target Region”). The Company intends to invest in investee companies where it believes its main Adviser can add value by implementing operational and/or financial restructuring over a 3 to 5 year horizon.
The company will only make an investment under its Private Equity Programme if its main Adviser believes there is a clear exit strategy available, such as trade sale, break up and subsequent disposal of different divisions or assets, or a flotation on a stock exchange.
Trading Programme
Under its Trading Programme, the Fund aims to generate short and medium term returns by investing such portion of its assets as determined by the Directors from time to time in listed equities and fixed income securities, including convertible and other mezzanine instruments, issued by entities in the Target Region. The Trading Programme investment differs from the Private Equity Programme in the key respect that the Company will not take significant or controlling stakes in Investee Companies and will typically hold investment for shorter periods of time than investments made under the Private Equity Programme.
Value Creation
Under its Private Equity Programme, the main Adviser intends to be involved at board level of the investee companies to seek to implement operational and financial changes in order to enhance returns. As part of Fund's pre-acquisition due diligence, the Investment Advisers will seek to identify specific actions that they believe will create value in the target Investee Company post acquisition and, where appropriate, will seek to work with third party professionals to develop, in combination with the proposed management team of the target, a value creation plan with clear and identifiable short and medium term targets. These plans are likely to address different parts of the business and will be tailored to reflect the specific challenges of the relevant target company. The main Adviser believes that the investment strategies under the Private Equity and Trading Programmes might achieve returns which are different than the returns of the relevant market indices.
Investing Restrictions and Cross-Holdings
The Directors and the main Adviser will take steps to ensure that the portfolio of investments is sufficiently diversified to spread the risks of those investments. The Investment Strategy does not restrict the Fund from investing in other closed-ended funds operating in the Target Region. In line with the Fund’s investment policy, the Board will not normally authorise any investment in a single Investee Company that is greater than 20 per cent of the Net Asset Value at the time of effecting the investment and in no circumstances will it approve an investment in a single Investee Company that is greater than 25 per cent of the Net Asset Value at the time of effecting the investment.
Gearing
The Fund may be geared up to a maximum level of 30 per cent of the value of its gross assets.
Distribution Policy
The Fund’s investment objective is focused principally on the provision of capital growth.