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BaltCap fund theft causes several Estonian pension funds millions in losses

Stacks of euro bills.
Stacks of euro bills. Source: Siim Lõvi/ERR

The Swedbank, LHV, and SEB pension funds lost several million euros due to a partner's misconduct in the BaltCap investment fund in Lithuania last November. The BaltCap fund holds 0.1 percent of their pension funds' assets.

The pension funds of Swedbank, LHV and SEB have invested in BaltCap, the largest private equity fund manager in the Baltics. But late last year, the Estonian banks' pension funds had to write down the value of BaltCap by up to 20 percent because their Lithuanian partner is under criminal investigation, Äripäev writes.

Last November, Šarunas Stepukonis embezzled money from BaltCap infrastructure funds with a total volume of over €100 million. Swedbank has invested a total of €20 million in BaltCap, including €10 million in the infrastructure fund. Now they had to adjust the value by more than €2 million.

"If you look at the amounts, these BaltCap funds are a very, very small part of the total pension fund. This trim still had a small impact on the overall result of the fund, 0.1 percent. In 2017, we invested money in them, and since then the fund has returned a total of more than 20 percent plus," Age Petter, the head of investment funds at Swedbank, said.

LHV has invested €5 million in BaltCap.

"The amount of loss for us is about a million, which is obviously a very significant amount in absolute terms, and we expect Baltcap to pay it back. However, in a broader context, the amount of pension fund assets that were invested in that particular fund was only 0.1 percent, so the overall impact was not that large," Vahur Vallistu, the head of LHV asset management, said.

SEB has invested €3 million in BaltCap, which represents one percent of the two funds.

"Because our portfolios are well diversified, the impact is very small: -0.12 percent for one fund, -0.27 percent for another," Endriko Võrklaev, the head of SEB pension funds, said.

BaltCap co-founder Kristjan Kalda said that the total amount of financial loss to the company could not be disclosed due to the investigation. The assets of the fund or the original investment are all there, so that the loss is more about the profits that were not made.

"First of all, it is extremely unpleasant for any entrepreneur to realize that someone is stealing their money behind their back. You have to consider that BaltCap itself is an investor and we all have our own money in the same fund. This is a very unpleasant thing for an entrepreneur to have to deal with. And secondly, of course, this loss of revenue has to be compensated," Kalda said.

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Editor: Marko Tooming, Kristina Kersa

Source: ERR

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