Bloomberg - Eurasian Development Bank in Talks to Start Private-Equity Fund

Oct. 15 (Bloomberg) — Eurasian Development Bank, a Russian-led lender backed by six former Soviet republics, is in talks with investors in Asia and the Middle East to start a private-equity fund as it seeks to diversify operations.

The bank is due to meet with investors in Singapore and Tokyo among other cities as it discusses setting up a fund of at least $100 million as soon as next year, Igor Finogenov, chairman of the executive board, said in an interview in Tokyo. For every $5 of private cash the Almaty, Kazakhstan-based bank is ready to put in $1 of its own, he said.

We can start with $100 million and take it from there," Finogenov said Oct. 12 on the sidelines of the International Monetary Fund meeting in Tokyo.

The bank is pushing into private equity to wean itself off a reliance on funding projects in member states that also include Kazakhstan, Armenia, Tajikistan, Belarus and Kyrgyzstan. The entry also means competing for investors at a time when fundraising in the Asia-Pacific region is at a three-year low of $22.3 billion for the first half of 2012, according to the Asian Venture Capital Journal.

Direct investments currently make up less than 1 percent of the bank’s $3.7 billion portfolio, half of which is in transportation and energy projects. The lender plans to boost its investments by at least $800 million by the end of 2013 with funding for projects including a Kyrgyz hydro-power station and a Kazakh car assembly plant planned by OAO Sollers and Azia Avto, he said.

Vietnam, Mongolia

The Eurasian Development Bank is also in talks with Vietnam and Mongolia for the nations to become the lender’s first Asian members, Finogenov said.

Once Mongolia is a member, the bank may help finance new rail routes there and the development of the 6-billion-metric-ton Tavan Tolgoi coal field, Finogenov said. Mongolia’s economy grew 17.3 percent last year.

The bank would like to act as a «bridge» for capital moving between its member states, Finogenov said.

To fund additional investments, the bank is looking to sell another $100 million to $200 million of bonds next year, he said. The lender sold $500 million of 10-year, 4.767 percent bonds in September.