EBRD Invests €40 Million in Avallon MBO Fund IV
The European Bank for Reconstruction and Development is backing a new fund to boost SME equity capital in Eastern Europe.
Updated on Oct. 15, 2026 in Investing
Live Poll
Do you believe private equity investment is the best way to support small business growth?
The European Bank for Reconstruction and Development has committed €40 million to Avallon MBO Fund IV to support management buyouts. This initiative aims to provide essential long-term equity capital to small and medium-sized enterprises across Central and Eastern Europe.
Why it matters
The investment seeks to bridge the growth financing gap for smaller businesses in the region. Private equity fundraising challenges have historically limited the availability of risk capital, which this fund aims to address through a diversified portfolio.
The fund targets total commitments of €220 million with a maximum cap of €260 million. At least 70 percent of capital is earmarked for Poland, with up to 30 percent allocated to the broader Central and Eastern European region.
The players
European Bank for Reconstruction and Development
This international financial institution was founded in 1991 to support the transition toward market economies in Central and Eastern Europe.
Avallon MBO
This investment firm has operated for 25 years and specializes in management buyout transactions in the Central and Eastern European market.
The details
Avallon MBO Fund IV focuses on providing equity and quasi-equity capital to help businesses facilitate management buyouts and ownership changes. The fund builds upon the investment group's 25 years of operational experience in the region.
Timeline
October 15, 2026: The investment announcement was published.
Market Dynamics
This investment follows a pattern set by the European Bank for Reconstruction and Development's Poland portfolio, which has deployed over €17 billion across 610 projects to date. The move signals a continued commitment to developing local capital markets.
This move increases the volume of risk capital available for SMEs, potentially fostering more management-led ownership transitions in the region. Investors should monitor how this capital improves liquidity and long-term equity growth in the Central and Eastern European markets.
The takeaway
This partnership highlights the ongoing effort to stabilize and grow corporate ownership in emerging European markets. Business owners in the region should evaluate if such management buyout funds align with their long-term succession and equity financing strategies.
Further reading
Find more updates on regional private equity trends in our Investing section.
Source note: This article includes information reported by Ebrd.
Live Poll
Do you believe private equity investment is the best way to support small business growth?
