Over the next five years, a joint fund created by PGE Polish Energy group, the Polish Development Fund and the National Centre for Research and Development will invest PLN 100 million in total in the most innovative start-ups.They are particularly interested in projects within the scope of Industry 4.0, digitalisation, power storage, electromobility, customer relations digitalisation and big data.
The creation of SEI is yet another step taken to ensure the development of a strong innovation base within PGE Group. New business models implemented in the group allow it to expand its operations onto the capital markets as well. An investment agreement with PFR proves that PGE is gradually building its position on the Venture Capital market in Poland.
“The entity responsible for executing such undertakings on behalf of PGE is PGE Ventures, which will play a role of an investor and will have an influence on SEI’s investment policy. We pride ourselves in cooperation with the Polish Development Fund on creating an investment fund with so much significance for the Polish economy, in particular for increasing the innovation level within the power sector. The funds at SEI’s disposal will be allocated to boost the development of the most innovative technological start-ups. The entire Polish industry may benefit from an increase in their value,” says Henryk Baranowski, PGE Polish Energy Group Board President.
"PFR’s strategic goals include a considerable increase in accessibility of financing for young innovative companies which is to result in building a modern economy 4.0 and turn Poland into a European innovation hub. This goal is being executed by, among others, PFR Ventures, which is planning to invest c. PLN 4.5 billion in innovative start-ups in cooperation with independent investors via independent funds, such as SEI,” says Paweł Borys, Polish Development Fund Board President.
"The fund will be managed by a professional team whose aim, regardless of the capital source, will be to invest on market-based principles and maximise the value of these companies individually, as well as to maximise the overall value of the asset portfolio for its investors,” says Maciej Ćwikiewicz, PFR Ventures Board President.
The fund created jointly by PGE Ventures, PFR Ventures and the National Centre for Research and Development is the world’s first institutional CVC Fund of Funds (FoF) - PFR NCBR CVC FIZ. Half of its capital comes from European funds (Smart Growth Operational Programme 2014-2020). SpeedUp Energy Innovation powered by PGE Ventures will be co-financed on an equal basis by the Fund of Funds and PGE Ventures. SEI’s purpose is to invest in technological start-ups related to PGE’s brand chain of value or characterised by high innovation level or growth potential.
"The new fund is a leap for the development of a Polish system for supporting R&D projects and the best possible proof that, by establishing the Fund of Funds (FoF) last year, NCBR responded to a specific demand from innovators with regard to subsequent rounds of financing of R&D projects. SEI will perfectly complement this portfolio of financing instruments offered to start-ups by such institutions as NCBR or PFR Group,” says Professor Maciej Chorowski, Director of National Centre for Research and Development.
"A natural step in the development of SpeedUp Venture Capital Group will be to become involved in funds that will enable us to invest in companies at more advanced stages of their development. There are a lot of initiatives aiding enterprises at the early stages of growth, but we still lack capital to support the growth phase or project commercialisation of projects developed in the seed phase, i.e. just before they can be implemented and launched. SpeedUp Energy Innovation will be an excellent addition to this offer and it will open up opportunities for enterprises which have completed the early stage of development,” says Bartłomiej Gola, Founding Partner SpeedUp Group.
“Thanks to SEI’s fund investment operations, PGE Group will be present at every stage of development of young companies and have access to the innovative technologies being developed by the most mature start-ups at the same time. Moreover, SEI’s investment fields coincide with our own business operations.
This means that selected projects included in the SEI investment portfolio will be tested in real life with PGE’s infrastructure consisting of mines, power plants, CHPs, distribution assets and customer support systems, and they might be incorporated into PGE’s ongoing operations, thus contributing to optimisation of business processes and the development of new technologies,” adds Henryk Baranowski.
Ultimately, the capital of the SEI fund is to total PLN 100 million; the resources will be allocated to both investments and the fund’s operational activity. SEI is planning about a dozen capital participations and several follow-on investments over a five-year-long investment term. The planned investment threshold for the first financing round will fall within the PLN 3-3.5 million range but selected projects might be granted additional capitalisation up to PLN 10 million. The SEI fund also takes a co-investment option into consideration, especially with regard to the follow-on investments.
The new fund will be particularly interested in companies with a high potential for financial flow and high technological potential. Within the scope of the investment criteria, SEI assumes that the applicant investment projects must be at least at the early growth phase. Moreover, they must generate operational revenue and their capital demand should be directed, first and foremost, to market expansion.
The basic premise of the investment operations consists in SEI’s preference for industries and sectors that coincide with the scope of PGE’s Capital Group interests.
The capitalisation of PFR NCBR CVC Fund of Funds is estimated at EUR 200 million, that is c. PLN 865 million. The maximum capitalisation of capital funds may reach as much as PLN 320 million, and maximum funds allocated to a single investment will total up to PLN 60 million.