Highland Capital

Bishkek, Kyrgyz Republic, February 28, 2020— Highland Capital announces final close of Highland Private Equity & Mezzanine Fund LP (HPEMF), Kyrgyzstan’s first institutional private equity and mezzanine fund.

EBRD has provided a commitment of $8 million in the final closing of HPEMF. In August 2018, Highland Capital held first close with capital commitments of $15 million, including $8 million from IFC, a member of the World Bank Group, and $7 million from private investors and General Partner. Since launch, the fund is actively investing into Kyrgyz companies and targets to deploy the remaining funds within two years.

Cholpon Jumashukurov, Highland Capital’s Senior Managing Partner, said: “We are very pleased to welcome our new investor EBRD. EBRD’s participation in our Fund contributes to the development of the private equity industry of Kyrgyzstan as well as its economy.”

The Fund will continue its focus on providing equity and mezzanine financing targeting local SMEs in services, agricultural processing, healthcare, education, retail and TMT. Investments ranges from $0.8 million to $3.0 million.

About EBRD

European Bank for Reconstruction and Development (EBRD) is an international commercial organization, the major role of which is to provide assistance to the countries of Central and Eastern Europe and Commonwealth of Independent States in building market economy. It has been established in 1991 and since played a historic role and gained unique expertise in fostering change in the region - and beyond -, investing more than €140 billion in a total of over 5,600 projects.

About IFC

IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit http://www.ifc.org

Highland Capital and a private construction company and have agreed on a partnership to build a new modern business center in Bishkek. The amount of investments will be $1.6 million.

Highland Capital invests $1.8 million in construction company Icon Development.

Investments will be directed to the construction of a new modern multistoried residential complex - Malina to be located in the southern part of Bishkek. It is characterized by innovative architectural solutions using German-made outdoor material - clinker.

Adilet Dadybaev, General director of Icon Development noted: “Partnership with Highland Capital gives us confident to move forward, creating a new city architecture. On top of committed investments, the Fund provides with professional assistance and consulting on strategic project management. We believe that this long-term partnership will make great contribution to the attractiveness of investment projects in Kyrgyzstan for foreign capital”.

Eldan Usubakunov, Partner of the Fund commented: “We highly value the development prospects of the construction sector in the country and are pleased to participate in a unique construction project that combines new technologies and fresh architecture. The top management of the company consists of professionals with extensive experience in the field of construction, design and management”

About Icon Development

Icon Development is a dynamically developing company that specializes in the construction of modern, beautiful residential buildings, providing European comfort and the most current trends in housing construction. 

For more information about the company and Malina residential complex, please visit the company`s website http://www.icon.kg

Highland Capital has sponsored Bishkek Investment Forum (BIF) 2019, which was held on October 10-11 at Cultural and Ethnographic Complex Dasmia under “The Future is Now” slogan. Main topics were IT and access to financial technology, women's entrepreneurship, green technology and e-commerce. The Forum was attended by over 1000 visitors from Kyrgyzstan and neighboring countries representing a wide spectrum of industries, from both the private and public sectors.

This year, together with the BIF, an important event for regional business was held – the International Franchise and Trade Expo providing opportunities to businesses from the United States, European Union countries, and Middle East countries to build and expand brand exposure in Kyrgyzstan and among other Central Asian countries.

Highland Capital has conducted 2 master classes to raise awareness in the field of new financial instruments and trends. Master classes were held by Highland Capital team together with Mr. Mirsaid Kupuev, who has more than 7 years of experience in PE Funds (currently at NBK Capital Partners). The speakers introduced innovative financial products offered by Private Equity funds and Highland Capital specifically. Mr. Mirsaid Kupuev also took part in plenary discussion on the subject of “Central Asia - strong growth with the world”.

About BIF

Bishkek Investment Forum (BIF) is a platform where small and medium-sized businesses meet with large businesses, domestic and foreign investors, representatives of government agencies, international and local organizations, embassies and the business community. The Forum presents the most successful and promising business projects, the participants discusses the expected trends and changes in the economy, business environment and financial sector, as well as new vectors of cooperation for entrepreneurs.

SME Ventures Forum is an annual forum organized by the IFC for investment funds. This forum provides an excellent opportunity to gain new knowledge in the field of investment fund management, and the opportunity to share experiences with colleagues from other countries.

During the forum, the team also took advanced training courses (Bain and Company, BVCA).

One of the top private schools in Bishkek received a $1 million investment to expand and construct an alternate study building.

Highland Capital has partnered with a leading provider of pre-school and school education in Osh city. $800,000 of growth capital investment from Highland Capital enabled the further development of the Academy, initially formed in 2013, by supporting the construction of modern purpose-built facility to provide world class K-11 private education in the South of Kyrgyzstan.

New facility, officially opened on 30th of October 30 2019, is the second campus of the School and features bright modern classrooms that can house up to 330 students. The school is located in the central part of Osh, near major residential and commercial centers. The Academy curriculum is based on the Ministry of Education standards with enhanced emphasis on math & sciences, English language and further supplemented by extracurricular activities aimed at fostering creativity and critical thinking of pupils. The backers of this school are western-educated progressive professionals who have embraced the objective of providing education that meets commercial and social targets.

Aselia Kupueva, one of the founders of School, said: “The School has been growing and becoming one of the widely acknowledged brands in the education sector of South region. Our team is excited to partner with Highland Capital, a Kyrgyzstan’s first institutional investment fund. We believe Highland Capital is a like-minded partner that shares our values and culture. This investment will solidify our position as a leading school in South region, enabling us to equip our students to become global leaders of tomorrow.”

Cholponbek Jumashukurov, Managing Partner of Highland Capital, said: “Highland is committed to developing the education sector in the country and excited to partner with Kupuev family in their passion to develop our education. We look forward to taking the Academy to the next level of development.”

The education sector is vital for Kyrgyzstan’s future given that 37% of the population are under the age of 19. The city of Osh alone has more than 66 thousand students with insignificant amount enrolled in private schools.

About Academy

K-11 School is a licensed educational provider with two campuses in Osh, Kyrgyz Republic. The school was founded in 2013 and has 290 students. The founders are Western-educated business and finance professionals passionate about education. 

On May 31, 2019, Highland Capital participated in the investment forum “Small Business - Together to Success” arranged by the European Bank for Reconstruction and Development (EBRD). The forum gathered around 300 representatives of Kyrgyz SMEs, as well as key players of the financial market. Cholpon Jumashukurov, Senior Managing Partner, spoke in the plenary discussion, while other team members of the Fund participated in the B2B sessions and provided advice on attracting alternative sources of growth capital for SMEs.

In April 2019, Highland Capital welcomed a delegation of institutional investors, including EBRD. During one week, investors studied the Fund's portfolio, Highland Capital's team and processes, as well as the Kyrgyz economy and financial market.

Highand Capital has invested $500 000 in Kant TSP, a leading construction materials producer in the Kyrgyz Republic, supporting further development. Investments of Highland Capital will enable Kant TSP to launch the factory in the South of the country, which in turn will significantly reduce operational expenses of the company and expand availability of locally made construction materials to the South of the country.

Kant TSP is one of the largest producers of roofing slates in the region. It is the only enterprise within the territory of the Kyrgyz Republic, which produces the high-quality chrysotile products confirmed by the government certificates for each type of products. Kant TSP is already a proven market leader with strong growth potentials.

Construction sector takes a leading position in the economic development of the Kyrgyzstan and overall plays crucial role in developing countries.

The official presentation of the Fund was held on November 1st, 2019 at the Orion hotel. The presentation gathered representatives of local business, international financial organizations and state bodies, including Agency for the Promotion and Protection of Investments of the Kyrgyz Republic.

During the presentation, the Head of the International Finance Corporation in Kyrgyzstan, Martin Negele, noted the following: “We believe that the Kyrgyz Republic is a priority for us, it is a strategic country. You see that good factors of economic development play more and more role in the region. We believe that it is a good time to invest in the real sector”

Senior Managing Partner of the Fund, Cholponbek Dzhumashuurov highlighted main criteria for enterprises: “It must be a break-even business with a high growth potential and high turnover and must be entrepreneurs with high ambitions who need to reach the next level of further development and business knowledge”

Kyrgyz Deputy Economy Minister Eldar Abakirov also commented on the opening of the first private equity investment fund in Kyrgyzstan: “This indicates an improvement of the investment climate in our country, this indicates that investors are confident in our private business, we, as a state, supporting the investment environment as a whole from the legislation point of view of and in terms of execution"

SME Ventures Forum is an annual forum organized by the IFC for investment funds. This forum provides an excellent opportunity to gain new knowledge in the field of investment fund management, and the opportunity to share experiences with colleagues from other countries. Institutional investors such as CDC, Norfund, EBRD, DGGF, Shell Foundation, SIFEM/Obviam, FMO were also invited to the Forum. During the Forum, Highland Capital had the opportunity to make a presentation of the Fund to institutional investors.

IFC, a member of the World Bank Group, is investing $8 million in the fund to help expand access to finance for small and medium enterprises (SMEs) in the Kyrgyz Republic. In addition to IFC, Gregory Serrurier, the fund’s first international investor, and Emil Umetaliev, a reputable local businessman, are among the fund’s investors.

With currently $15 million in capital commitments, the new Highland Private Equity and Mezzanine Fund is the institutional private equity fund in the Kyrgyz Republic. The fund will provide equity and quasi-equity financing to local SMEs in services, agricultural processing, healthcare, education, telecommunications, media, and technology. This is critical because smaller business across the country often struggle to access the capital they need to expand. The fund will provide growth capital of $800,000 to $5.0 million, generating attractive investment returns while promoting job creation and economic growth.

Cholpon Jumashukurov, Highland Capital’s Senior Managing Partner, said: “We are thrilled to have built a diversified base of high‐caliber investors, including IFC and other private investors. We are also thankful to Emil Umetaliev and Gregory Serrurier, who trusted our team and approach by investing in our fund. Our investment approach fits the local market very well as it addresses the huge deficit of risk capital. We see a large number of compelling investment opportunities and we favor investments, where our team can add significant value beyond capital provision.”

IFC’s financing is helping Highland Private Equity and Mezzanine Fund to provide risk capital to up to 15 SMEs in the form of equity and quasi-equity financing while helping them develop strong management systems and corporate governance practices. Highland Capital seeks total $30 million and expects to hold the final close of the fund by August 2019.

“IFC’s investment is part of our broader efforts to foster investments in SMEs while spurring the creation of a local private equity market,” said Cassandra Colbert, IFC Regional Manager for Central Asia. “By supporting the country’s first local private equity fund, we hope to send a strong signal to other investors thinking of entering the Kyrgyz private equity market.”

Highland Capital’s local knowledge and customized investment approach are well-positioned to capitalize on the country’s rapidly growing sectors, its liberal currency and capital repatriation system, rising middle-class population, and favorable macro environment.

The Forum brought together 18 fund management teams from South Africa, West Africa, the Middle East, South Asia, Central Asia, South Asia, Central America and South America.  They engaged in lively discussions and workgroups that focused on defining the biggest common challenges facing GPs in emerging markets, including: time-consuming of fundraising process with local and international LPs; building a strong portfolio with the best available deals in the face of protracted timelines to first close; managing complex operating expense discussions with LPs; and building value in portfolio companies from the initial investment through exit.

During the Forum, a meeting with IFC was organized and it was discussed a potential IFC participation as an investor of the Fund.

Highland Capital sponsored the Bishkek Investment Forum (BIF) 2016, which was held on December 8 at Damas hotel. Senior Partner of the Fund Cholponbek Zhumashukurov was the speaker of the forum.

About BIF

Bishkek Investment Forum (BIF) is a platform where small and medium-sized businesses meet with large businesses, domestic and foreign investors, representatives of government agencies, international and local organizations, embassies and the business community. The Forum presents the most successful and promising business projects, the participants discusses the expected trends and changes in the economy, business environment and financial sector, as well as new vectors of cooperation for entrepreneurs.

Farm-enterprise "Grigorievsky Sad", located in the village of Grigorievka (Issyk-Kul region, Kyrgyzstan), is producing directly squeezed juices from local organic fruits under Nakktai trade mark. Nakktai juices are 100% natural direct squeezed juices produced by mechanical squeeze of fresh, natural fruits and vegetables grown in Issyk-Kul region.

Highland Capital`s senior team Cholponbek Jumashukurov and Eldan Usubakunov participated in Private Equity Masterclass held by EMPEA (Emerging Market Private Equity Association) and Asia Private Equity Forum 2016 in Hong Kong.

The masterclass was useful and the knowledge that was obtained was later used to form the concept and basic conditions of the Fund.

First meetings with potential investors of the Fund were held during this trip to Hong Kong.

Adal Azyk LLC is a top-3 producer of sausages in Kyrgyzstan with well-regarded brand name “Toyboss” and direct distribution channels. The company is owned and managed by three brothers: self-made entrepreneurs with a good reputation.

Toyboss has been demonstrating strong performance growing at a large rate. Recently it has built a brand-new production facility and own slaughterhouse, which increased the capacity manyfold. In 2017, the company received FSSC and ISO certifications that allows the company exporting to Kazakhstan and other member countries of the Eurasian Economic Union.

“Burger House (“BH”) is a fast casual restaurant specialised on “better burgers”. Investment in BH provided an opportunity to be the first mono burger concept in Bishkek and address this empty market niche. BH’s concept of better quality ingredients with quick service benefits from a global shift from fast food to fast casual sector. BH offers an opportunity to develop a premium local consumer brand based on local high quality fresh meat and ingredients vs. buying a global fast food franchise and using imported frozen ingredients. Engagement with Maverick Consultants, US-based restaurant consulting company with 15+ years of experience, helped to launch the restaurant and lowered the start-up risk.