King & Wood Mallesons (KWM) has advised the European Bank for Reconstruction and Development (EBRD) on its new Equity Participation Fund (EPF) with €350 million of first-round fundraising secured for direct equity investment from China’s State Administration of Foreign Exchange and the State Oil Fund of Azerbaijan.

The fund’s unique structure will allow global institutional investors to participate in all new eligible direct equity investments made by EBRD: the fund provides for EBRD to retain all shareholder rights of any qualifying investment, with investors receiving indirect economic interests from each investment through a series of equity return swaps.

Cindy Valentine, International Funds partner, said, “Being able to advise the EBRD on the formation of this new fund emphasises KWM’s position as a market-leader in private equity. The EPF will give investors an opportunity to mitigate risks through innovative equity return swaps and liquidity sweep options, while fully utilising EBRD's expertise and insight in making equity investments in developing economies.”

The King & Wood Mallesons team advised on all aspects of the fundraising, including the complex structuring of the new fund, and the financial regulation and tax aspects. The full team was led by London partner Cindy Valentine, with International Funds partner Rob Mailer, Finance partner Vanessa Docherty, and associates Andrew Rhodes and Charles Case.