Baltic private equity firm Baltcap is planning to launch a regional investment fund worth €50 million in cooperation with Kredex and Baltic pension funds to offer growth capital to small and medium-sized enterprises (SMEs) in Estonia, Latvia and Lithuania.
The fund is meant for local and Baltic businesses that want to launch new products and services, expand their operations through purchase and takeover deals and whose ambition is to grow and become market leaders, Baltcap said.
The new fund will be created in cooperation with Baltcap, the European Investment Fund (EIF), Kredex and local pension funds, which allows pension funds to invest in Baltic companies to strengthen their equity capital. The planned size of the fund is €50 million.
According to Martin Kodar, a managing partner at Baltcap, there are excellent growth opportunities in Estonia, Latvia and Lithuania in traditional as well as new branches of economy. "The region's SMEs need investments to retain their competitive ability and increase productivity," he added. "We see that the demand for growth capital is still big in Baltic countries."
Kodar noted that equity capital investments in the private sector in the region amount to 50 percent of the EU average. "With risk capital investments, the ratio has improved in the past few years thanks to international investors, but there is still not enough growth capital," he said.
EIF: Baltcap a leading fund manager in region
According to deputy chief executive of EIF Roger Havenith, Baltcap has proven itself as a leading fund manager in the region and the new fund will expand the scope even more. He said that the Baltcap Growth Fund being prepared by Baltcap is the fifth fund that will be brought to the market with support from EIF in the framework of the Baltic Innovation Fund initiative, adding that the EIF is happy with Baltcap's positive impact on the regional capital market.
The creation of the fund will soon be complete. Baltcap has entered into initial agreements with institutional investors to attract more than €40 million worth of assets. Among bigger investors are Swedbank's pension funds and, through the Baltic Innovation Fund, EIF and Kredex as well.
The establishment of the fund must be approved by the Estonian Financial Supervision Authority and the fund must be entered into Estonia's commercial register. The application to set up the fund has already been submitted to the Financial Supervision Authority.
Editor: Aili Vahtla