As the Hungarian Development Bank Rt (MFB) steps up its venture capital activities, fund managers have recently had misgivings about its choice of targets, and fear it may become an unfairly advantaged rival to private funds.
The state-owned MFB has earmarked Ft 40 billion (Ђ152 million) to invest into equity-starved small- and medium- sized enterprises (SMEs) in the coming months, with the first investments to be announced soon.
According to a CEO of the MFB, it is hoped that an agreement will be reached soon, under which the European Investment Fund will guarantee 50% of the capital the MFB invests into SMEs.
However, this could hurt private equity firms. “If this guarantee is available only for the MFB, with private equity investors being excluded, that would seriously distort the market,” said Zombory, who heads the strategic and government relations committee of the Hungarian Venture Capital and Private Equity Association (HVCA).
