• expanding the volume of operations, consolidation of the company and increase in market share;
• improve in financial status and increase access to loan capital;
• improvment in internal efficiency and managenmnt.

Private equity funds – investment funds (joint investment institutions) engaged in direct investment on behalf and for the benefit of their investors and operate on the basis of its investment policy statement. Investment funds are a legal form of entity created specifically for the purpose of joint investment. Their establishment is initiated by asset management companies operating under the license.

Investment funds as a vehicle have the following advantages:

• ability to make larger investments;
• diversification;
• professional investment process;
• economies of scale;
• can not become bankrupt or financial pyramid;
• all the fund’s profit is divided among the investors in full, with each assets valuation;
• fund’s profit is not taxable, tax exemptions on dividends (5% and 0% for individualand corporate and institutional investors respectively);
• Securities and Stock Market State Commossion oversight and transparency.

Features of private equity funds:

• fund’s share value and return based on the fundamental performance of portfolio companies, are more sustainable and economically sound;
• substantial participation in the porfoilio companies share capital – additional investor protection and extra value;
• longer investment terms, European practice – 7-10 years, in Ukraine – 3-5 years.
• low correlation with stock market returns and other financial instruments allows PE funds to be a favorable diversification option almost for any investment portfolio.

Investment Strategy in Ukraine:

• service companies focused on the basic consumer needs:
  • telecommunications;
  • pharmaceuticals;
  • financial services;
  • logistics;
  • marketing;
  • IT services;
  • waste management;
  • niche retail chains;
• established company with a strong and continuous competitive advantage in its niche with the need of capital and support for further expansion and competitiveness growth;
• influential share capital ownership (controlling stake);
• management share capital stake;
• active involvement in the portfolio companies’ corporate (non-operational) governance on the issues of strategy, monitoring and control and necessary support in development;
• companies preparation for sell to the international (European) strategic or financial investor:
  • European corporate governance standards implementation;
  • revenue increase;
  • increase in market share – more then 10%, but depends on the sector.