East Capital has launched a new fund investing in Russia and Eastern Europe, Special Opportunities Fund II.

The fund "will target investments in companies with a positive outlook for future operations but which, due to market or owner-specific reasons, can be acquired at valuations which are lower than those suggested by the companies' fundamentals. In addition, the Fund will also invest in distressed situations, and through directed rights issues, when the risk reward ratio for such investments is favorable," East Capital said in a press release.

"When appropriate, East Capital will assume an active role in companies through board representation, or other means," the press release says.

"The Fund term is four years and the maximum fund size is limited to 100 million euro," it says. East Capital will invest 35 million euro of its own money in the fund.

East Capital launched an earlier fund, Special Opportunities, in the second quarter of 2009. Its money has been fully invested, yielding 38% annually.

East Capital, founded in 1997, specializes in Eastern Europe. The Stockholm-based company has about 4.2 billion euro under management. The founders and chief owners are Peter Elam Hakansson, Kestutis Sasnauskas, and Karine Hirn.