The fund's Country Manager, Radu Bugica, told Business Standard that the amount could be even higher than €20 million. "We plan to invest in Romania in food processing, construction materials, retail and distribution," Bugica added.
Earlier this week, SBF IV purchased the majority package of Covalact, in a deal estimated to be worth some €7 million. Bugica said the fund aims to increase the Sfantu-Gheorghe dairy producer's production capacity, modernizing this, and widening the portfolio of products.
He added that the factory's management is not to be changed. Covalact General Manager and former majority shareholder, Ioan Balan, said SBF IV's investment plan is to be finalized in a month and a half.
The company's current daily processing capacity is 200,000 liters. Raw materials come from both local production and imports. Some 10 percent of processed milk is imported from Hungary.
The percentage of imported raw materials is likely to rise in 2008, due to this year's drought in Romania, which has led to lower production. Drought, combined with higher energy prices, are also likely to lead to rises in the prices of milk, by at least 15 percent, and of dairy products, by some 10 percent.
Covalact posted turnover worth €15 million in 2006 and estimates that the
business will rise by up to €17 million this year. The local dairy products market amounts to some €88 million, with main players international companies Danone and Friesland, and local companies Albalact, Brailact and Covalact.
SBF IV has offices in the U.S., Romania, Bulgaria, and Ukraine, and has attracted placements worth €250 million since 2005. Some 20 percent of total investments are owned by the European Bank for Reconstruction and Development (EBRD).
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