So far four investment decisions into private equity and venture capital funds have been made under BIF, with BPM Mezzanine Fund and BaltCap Private Equity Fund II already operational and investing in Baltic enterprises, and Livonia Partners Fund and Karma Ventures Fund to start operations later this year. The total amount of funding available in these four funds is estimated to be at least EUR 270 million, with mostly private pension funds contributing very significantly in addition to the BIF investment. With these investments almost exhausting BIF capacity, but seeing further market potential, EIF started discussions with Baltic investors in early 2015 to increase the initiative, which has now concluded successfully. The increase will allow financing at least two more fund managers, thus triggering further private investment, with the total size of these new funds adding at least EUR 100 million to available funding, which will be invested primarily in Baltic enterprises over next 5-7 years.
European Investment Fund Chief Executive, Pier Luigi Gilibert stated, “This increase is a result of a close co-operation between the EIF and the three Member States from the Baltic region to build a long-term investment scheme that has already attracted substantial amounts of additional private financing. Together, the combination of our resources has already gone a long way in addressing a real cross-border market gap in the availability of equity capital for Baltic SMEs. EIF is pleased to have led this process by bringing together the three Baltic State markets and implementing the best market standards for equity investments, and looks forward to seeing further positive collaboration also in other areas”.
The original BIF investment capacity was EUR 100 million, provided by the national agencies – KredEx (Estonia), Altum (former Latvian Guarantee Agency, Latvia) and Invega (Lithuania) investing EUR 20 million each alongside the EIF investment of EUR 40 million.
The investment process for the Baltic Innovation Fund is ongoing, with EIF processing transactions with potential Fund Managers. Each Fund manager is expected to attract at least additional equivalent amount of private finance from pension funds and private investors which will at least double the amount of investment capital, which will then be invested into innovative high-growth SMEs.
Importantly, the Baltic Innovation Fund is the result of strong co-operation between the three Baltic States and the EIF that is unique in its nature across Europe and places the region in a position to benefit from greater levels of private investment than before. Furthermore, the three governments are taking a lead in this process by investing into the Baltic Innovation Fund through their respective national agencies and utilising the revolved Structural Funds from previously successful SME support schemes to do so. This unique trans-national process provides a real opportunity to further develop the Baltic PE & VC market.