EBRD invests €40 million in CEE-focused Avallon MBO Fund IV

The European Bank for Reconstruction and Development (EBRD) has invested up to €40 million in Avallon MBO Fund IV, a private equity fund supporting small and medium-sized businesses in Poland and other Central and Eastern European countries.

The investment in Avallon MBO Fund IV aims to improve access to long-term capital for smaller companies, helping them expand, innovate and strengthen their competitiveness, the EBRD said in a press release on Thursday.

The fund, managed by Poland-based Avallon, is targeting commitments of €220 million, with a maximum size of €260 million. At least 70% of its capital will be invested in Poland, while up to 30% will go to Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Romania, Slovakia, and Slovenia.

The fund will invest in equity and equity-like instruments, providing financing for business expansion, management buyouts and other corporate development opportunities.

The EBRD said its participation would help attract additional investors amid challenging fundraising conditions and limited availability of long-term risk capital for smaller businesses across the region.

Avallon completed the first closing of Avallon MBO Fund IV in September, raising €171.5 million, the Polish company said back then. The fund invests alongside managers and founders of family businesses, targeting companies with turnover of €20–100 million. 

Avallon MBO Fund IV will focus on technology-driven growth, investing in tech firms and traditional businesses using digitalisation, automation and data analytics to boost competitiveness. It will also target consumer brands, B2B services, e-commerce and manufacturing, supporting companies with succession, professionalisation and consolidation.

The fund already made its first investment in June, acquiring a majority stake in the Polish beauty brand Inglot.