BaltCap in the process of establishing a new growth fund to invest in small and medium enterprises
Tallinn, 4 May 2017 - BaltCap has secured commitments to establish a new regional fund to provide growth capital across the Baltic region for small and medium-sized (SME) companies.
The new fund would target both local and pan-Baltic companies who want to create new products and services, accelerate organic growth or acquire businesses with an ambition to grow and become the market leaders.
The new regional fund is formed jointly by BaltCap, European Investment Fund (EIF) investing through Baltic Innovation Fund (a Fund-of-Fund initiative between EIF and the governments of Estonia, Latvia and Lithuania acting through their respective national agencies KredEx, Altum and Invega) and local pension funds thus enabling latter institutions to invest into Baltic companies to strengthen their equity. The target size of the Fund will be EUR 50m.
Estonia, Latvia and Lithuania are showing strong fundamentals for growth opportunities in both traditional and new industries across all economic sectors: ‘SME companies of the region need investments to maintain competitiveness and increase productivity. We see that demand for growth capital remains strong in the Baltics’, said Kornelijus Čelutka, BaltCap partner.
K. Čelutka added: ‘Total private equity investments in the region are 50% of the EU average. The ratio has improved for venture capital investments in recent years, but there is still a shortage of growth capital for SMEs and we want to fill the gap’, explained K. Čelutka the purpose to raise a new fund.
Roger Havenith, Deputy Chief Executive of EIF, stated ‘BaltCap’s record and proven capability as an investor in this region are unmatched and this new fund will extend the reach of BaltCap even further. This is the 5th fund to be launched under the Baltic Innovation Fund initiative and it represents a significant milestone in the implementation of this unique pan-Baltic cooperation. Being both an architect and key investor in the Baltic Innovation Fund alongside our National Promotional Institution partners, EIF is delighted to see the launch of this new fund.’
BaltCap has already secured commitments from institutional investors of more than €40 million, and has submitted an application to the Estonian Financial Supervision Authority for registration of the management company, which is required for the establishment of the Fund. After obtaining necessary registrations, the Fund can be established, and start its intended investment activities. The investors who have already made their commitments to the Fund include Baltic Innovation Fund, Swedbank and DNB pension funds, and BaltCap itself.
Upon establishment, this fund would be a continuation of growth capital strategy from BaltCap. In 2001 BaltCap established its first growth strategy fund, the SME Fund, which was followed by two Jeremie funds in Lithuania, established in 2010-2011.
BaltCap is the leading dedicated private equity and venture capital investor in the Baltic States (Estonia, Latvia and Lithuania). BaltCap supports strong management teams and companies with a vision to grow in the Baltics and beyond. BaltCap invests in companies with exceptional growth potential and provides them necessary tools in achieving the targets and acts as a professional owner working closely with the management and other shareholders.
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
About Baltic Innovation Fund
The Baltic Innovation Fund is an innovative investment initiative created by cooperation between the Republic of Estonia, the Republic of Latvia, the Republic of Lithuania and EIF that is unique in its nature across Europe. The Baltic Innovation Fund will invest EUR 130 million into private equity, mezzanine and venture capital funds focused on the Baltic States during 2013-2017. It is a key initiative with EIF partnering with three important national agencies – Altum (Latvia), KredEx (Estonia) and Invega (Lithuania). This unique trans-national process provides a real opportunity to further develop the Baltic PE & VC market.