Altum-News-Agreement Signed on the Allocation of ERDF Funding of 118 Million Euros for Business Development

Agreement Signed on the Allocation of ERDF Funding of 118 Million Euros for Business Development


09. Jun, 2016

On 8 June, JSC “Development Financial Institution Altum” (ALTUM) and the Central Finance and Contracting Agency (CFCA) signed a financing agreement on the implementation of the fund of funds and financial instruments.

In accordance with this agreement, ALTUM will receive the first part of the funding of the European Regional Development Fund (ERDF) of 118.44 million euros within the framework of 2014 – 2020 planning period of European Union funds for creating a fund of funds to introduce several financial instruments for supporting Latvian companies.

The total ERDF funding in the fund of funds created by ALTUM will amount to 126 million euros. In addition thereto, private funds will be also attracted, allowing for increasing the total funding available to entrepreneurs up to 376 million euros.


Reinis Bērziņš, ALTUM Chairman of the Board:


“Creation of the fund of funds will ensure a range of benefits. Firstly, it will be an opportunity to use the common funding in a more flexible and effective manner, while responding to market needs faster. For example, if any financial instrument is in high demand on the market, while another is less popular, we will be able to redistribute the initial funding in favour of the former faster. Secondly, the creation of the fund of funds will allow for ensuring the sustainability of programmes, repeatedly using repaid investments for financing SMEs. The fund of funds will also attract the funding of the private sector for financing companies and financial instruments introduced by the fund of funds will ensure aid in a commensurate manner and with the least mutilating impact on competition. Allocation of funding is also a certification for ALTUM’s performance and professionalism, entrusting to continue already commenced aid activities, as well as to introduce completely new company financing solutions in fields where deficiencies of the private finance market have been identified”.

The fund of funds will provide aid in the form of aid financial instruments to entrepreneurs for the implementation of viable projects. Its areas of activity will be aimed at the creation of new companies, at the early stage of business, i.e. preparation, launch and development stages, and at strengthening the principal activity of business, development of new markets or implementation of new areas of development.


Due to the funding from the fund of funds, a loan guarantee programme was launched this June; within the framework of this programme, companies will be ensured of aid to receive investments and current assets, as well as financial lease, factoring, bank guarantees and letters of credit with Latvian credit institutions and their leasing and factoring companies. Soon after, new micro loan programmes and start-up loan programmes will be launched as well. In the third quarter of this year, a parallel or mezzanine loan programme will be introduced as well, allowing companies to receive ALTUM’s funding in addition to loans of credit institutions to implement large investment projects.


In the field of venture capital, once ALTUM has selected private fund managers as the result of public procurement, acceleration funds will commence their operation approximately in the third quarter of the upcoming year, providing aid to companies at the early stage of development by means of investments, training and attraction of experts and mentors to promote the commercialisation of products of these companies and preparation for entering the market. Soon after them, seed, start-up and growth capital funds will commence their operation, making capital and quasi-equity investments in Latvian companies at different stages. Likewise, it is planned to introduce a joint investment fund of business angels.


The financing agreement was signed; the fund of funds and financial investments will be introduced in accordance with Cabinet Regulation No. 118 of 1 March 2016 “Regulations regarding the Procedures for Implementing Financial Instruments and the Fund of Funds for Introducing Activities of Specific Aid Goal 3.1.1 “To Promote the Creation and Development of Small and Medium Merchants, Particularly in Processing Industry and RIS3 Priority Sectors” and Specific Aid Goal 3.1.2 “To Increase the Number of Rapidly Growing Merchants” of the Action Programme “Growth and Employment”” and provisions of state aid programmes of certain financial instruments.

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