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This program of the Ministry of Economy and ALTUM is designed to reduce geographical hurdles to purchasing housing in the regions where mortgage lending has so far been limited. The program will run until 31 December 2029, its total funding amounts to EUR 105 million. Residents can apply for a loan from October 29 on ALTUM’s Customer Service Portal mans.altum.lv.

The program Loans for Purchasing of Housing in the Regions will offer loans of up to EUR 74,000 with maturity of up to 30 years. The first installment will be up to 5% of the transaction’s amount and can also be covered by the ALTUM subsidy ’Balsts’ available to multi-child families and families with children with disabilities. The property purchased may serve as a collateral for the loan and the amount of funding may reach 100% of the value of the property. 

ALTUM received the Consumer Rights Protection Center’s license on 4 August this year.

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The bond issue garnered significant interest from Baltic institutional investors. Overall, 18 institutional investors participated in the bond offering, including Nordic Investment Bank. The allocation of the issued volume was as follows: 69% to asset management funds, 14% to Nordic Investment Bank, 13% to banks, and 4% to insurance companies. Geographically 43% of the bond was allocated to Latvian investors, 32% to – Lithuanian, 11% to – Estonian and 14% to investor based in Finland.

Chairman of the Management Board of ALTUM Reinis Bērziņš:

“This is ALTUM’s sixth and largest bond issuance to date, and it is a significant transaction not only for ALTUM but also for the Baltic capital markets – both in terms of the volume of EUR 70 million and the investor structure.

The achieved bond yield level of 3.576% is particularly noteworthy. This result demonstrates that investors are interested in investing in high-rated companies with a good reputation and a clear operational vision, even in the current challenging capital market conditions.

We are proud that Nordic Investment Bank was among the investors, which is a testament to ALTUM’s reliability and reputation at the international level. At the same time, this issuance provided an opportunity for local pension funds to make stable and predictable investments directly into the Latvian economy. Thus, ALTUM’s bond issuance not only diversifies ALTUM’s funding base but also contributes to the development of the Baltic capital market.

With the ALTUM bond issuance program approved by the Bank of Latvia in May this year, totaling EUR 120 million, we affirm that we continue to actively participate in the capital market in the long term with a clear vision and long-term contribution to the Latvian economy.”.

The issue was organised and managed by Luminor banka Legal assistance was provided by COBALT.

More about this topic: https://www.altum.lv/en/investors/bonds/programme-25/

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Applicants interested in managing the IPO Fund can submit their applications until 30 August, 2024, at 23:59, by sending them electronically to ipo@altum.lv or equity@invega.lt. Following the application deadline, the selection committee will begin evaluating candidates, and the selected fund manager is expected to be announced by the end of the year.

Ieva Jansone-Buka, Member of the Board (ALTUM):

“The initiation of the manager selection process is the next step towards launching the IPO fund. During the preparation stage, in collaboration with our Lithuanian colleagues, we held public consultations with market participants regarding the selection process regulations and received over 60 recommendations that helped refine the selection criteria. The fund manager’s responsibility will be to select companies that are suitable for capital market development and for whom this step represents the next phase in their growth and expansion. Currently, small and medium-sized enterprises primarily finance their development through their own funds, bank loans, and venture capital. International experience demonstrates that the capital market is one of the three main pillars of corporate capital accessibility.”

For more information about the selection process, please visit: Venture Capital – Altum

The total fund volume is planned to be EUR 48.78 million, with EUR 20 million invested by ALTUM, EUR 18.78 million by INVEGA, and EUR 10 million to be raised by the fund manager. The fund’s investment strategy includes investments in Latvia and Lithuania, at least in the amount of each country’s invested capital. The fund will provide financing for SMEs and small or innovative mid-cup companies for initial listings and inclusion in the Baltic States securities market, primarily the stock market, by investing in initial public or private equity (IPO) and bond (IBO) offerings on the Nasdaq Baltic Stock Exchange. Additionally, the fund may invest in the pre-offering stage with the clear intention of listing the company on the exchange within a suitable timeframe (approximately 12–36 months), as well as in the IPO/IBO secondary market, provided that the fund participated in the initial IPO/IBO.

The fund will prioritize profitable SMEs and small or innovative mid-cup companies with an enterprise value ranging approximately from EUR 5 to 100 million. It aims to support 13-18 companies, With planned investment amounts per company ranging from EUR 0.5 to 5 million, the fund will have the capacity to invest up to 50% of the total investment amount.

The Cabinet of Ministers granted approval for the establishment of the Baltic Capital Market Acceleration Fund on 13 June, 2023.

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“Baltic Capital Markets Acceleration Fund” will be targetting SMEs and small, innovative mid-cap companies operating in the Lithuanian and Latvian markets, which are planning for a near-term listing on a Baltic stock exchange.

Open call for expression of interest: https://invega.lt/en/doclib/sb185cinv4ptkwduny6vc54xrfmbcbtq

Comments are welcome up to and including 9 February, 2024 at  equity@invega.lt.

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ZGI-4, a fund managed by ZGI Capital, has invested EUR 1.5 million in start-up eAgronom, and 60% of these investments or EUR 0.9 million is investment of ALTUM stemming from the European Union (EU) funds. eAgronom which is already broadly known in the Baltic states and Poland with its farm management platform has developed a unique carbon farming program for farmers. Investments have been allocated for the company’s working capital and further development.

eAgronom has developed a unique program for farmers that helps to introduce sustainable farming methods and provides an opportunity to generate, certify and sell carbon offsets which meet the highest quality standards.

As farming industry is one of the largest environment polluters, it plays a significant role in recovery of the planet. At the same time, soil is one of the world’s largest natural carbon sinks. By using certain farming methods, it is possible to significantly improve carbon sequestration from the atmosphere into the soil, thus increasing the quality and fertility of the soil, reducing the necessity to use mineral fertilizers and providing significant contribution to achieving the environmental goals. The amount of carbon absorbed by soil as a result of considerate farming practices can be measured and subsequently sold as a carbon credit, providing an additional income to farmers.

eAgronom plans to use the attracted financing to expand in the market in the EU and outside EU, improve carbon emissions tracking technologies, including the introduction of blockchain solutions, and certify the programme in line with the highest industry standards.

“eAgronom has an energetic, knowledgeable, motivated and very ambitious team with a truly global vision of the future. Besides, considering the EU Green Deal for mitigation of climate change and increasing prices of energy resources and mineral fertilizers, interest in sustainable farming methods and their funding will be growing in the future. Investment projects with a focus on sustainable solutions are in demand right now, and we are glad to have an opportunity to support them. We can invest from EUR 0.5 million up to EUR 4.8 million in one company, therefore funding is also available for large-scale projects,” said ZGI Capital leading partner Normunds Igolnieks.

“Investment in eAgronom is a good example of how through venture capital funds ALTUM invests in innovative and ambitious companies with sustainable business ideas and scalability potential that also brings along higher risks. With the help of venture capital funds financed by ALTUM, we are investing and in the next planning periods will continue to invest sizeable EU funds resources in development of companies at different maturity stages, promoting the economic development of the Baltic region and increased global competitiveness of these companies,”  said ALTUM board member Ieva Jansone-Buka.

About ZGI Capital

ZGI Capital is an alternative investment fund manager, registered with the Finance and Capital Market Commission (FCMC), which operates in the Baltic market since 2005. The investment period has been concluded for three generations of funds and currently the investments are made from the next-generation fund ZGI-4.

About eAgronom

Estonian start-up eAgronom was established in 2016, and currently it employs more than 80 people. eAgronom has around 1,500 clients across Europe, managing more than one million hectares of arable land. During the last financing round the company attracted USD 7.4 million.

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Medium-sized and large enterprises registered in Latvia with both local and foreign capital will be eligible to apply for the programme and a loan with a capital discount. If the project reaches the planned goals after implementation, the company will be able to receive a capital discount in the amount of 30% of the eligible costs of the project.

Minister of Economics Mr Jānis Vitenbergs:

“Export indicators continue to grow, yet a large part of export is comprised of wood, grain and other natural resources of Latvia. These resources should not serve the development of other countries, rather they should create added value here, to raise the wellbeing of our entrepreneurs and citizens. We have created a new programme to stimulate Latvian enterprises to invest in the development of new products. Each such project will also stimulate the services and production of products for other companies, create new well-paid jobs and increase export and tax income.”

The aim of the programme is to provide support for projects important for the development of the Latvian economy, which will help to reach strategic aims such as the re-industrialisation of the economy to sectors with higher added value and doubling the amount of export by 2027. By implementing the programme, at least 800 new, well-paid jobs will be created; each project will bring a yearly increase of export of at least three million euros per year and investments of 250 thousand euros in research and development each year.

Kaspars Rožkalns, LIAA Director General:

“Currently, in smart technology specialities such as bioeconomy, biomedicine, photonics, smart energetics and IT, strong ecosystems are formed, which to a large extent are based on large Latvian enterprises. These enterprises become customers for a large amount of small enterprises, invest in research and development, as well as collaborate with scientific institutions, creating a wide impact on agriculture. Until now, for large enterprises, state funding to carry out ambitious projects was not available. Therefore such an initiative may be evaluated as a significant step towards the faster growth of the economy, which will result in larger tax income and an increase in average salary.” 

Project selection will continue until 18 April and LIAA will provide its decision within a month after the deadline for submission of the application. As the next step, the financial criteria of the projects will be evaluated and decisions on awarding the loan will be taken by ALTUM.

Reinis Bērziņš, Chairman of the Management Board of Altum:

“The capital discount included in the new programme, which is a complete or partial reduction of the loan amount, is an attractive solution for companies; therefore, we expect high-quality business projects and healthy competition. Medium-sized and large enterprises, planning investments for starting or expanding production in the amount of 10 million euros, will be eligible for the loan with a capital discount. It is important that the support is intended for projects, the implementation of which has not started before the receipt of the support. Which means, that the support will land with new, extensive projects with high return, which will benefit the national economy in general. The medium-sized and large enterprises are often important employers in the local government; they provide orders to their suppliers, the SMEs, in this way also providing workplaces in such companies and enhancing the economic flow far beyond their company.”

For a more detailed description of the programme conditions, all persons interested are invited to participate in an online seminar, which will take place on 19 January at 10:00 a.m. It will be possible to follow the seminar in the Ministry of Economics, LIAA and ALTUM Facebook channels.

Conditions for receiving support

The support will be granted to projects implemented in the priority sectors of smart specialisation (knowledge inclusive bioeconomy, biomedicine, medical technologies, pharmacy, photonics and smart materials, technologies and engineering systems, smart energetics and mobility, data and communication technologies). The projects also need to be coordinated with the EU goals and Latvia’s liabilities regarding digital transformation and climate neutrality.

To receive the support, the investment projects shall meet at least four of the criteria listed below:

a) The monthly gross work salary for the staff employed as a result of the implementation of the investment project shall not be less than the average gross monthly salary in the region in the previous year, to which the ratio of 1.3 has been applied (except for Riga, were the average gross salary for the staff shall not be less than the monthly average salary amount in the national economy in the previous year, to which the ratio of 1.3 has been applied.

b) As a result of the investment project, the amount of export of goods and services is at least 3 million euros per year.

c) As the implementation result of the investment project, for each 250 thousand euros of the general available capital discount, a new full-time job has been created, and at least 12 new full-time jobs have been created in total.

d) The investment of the enterprise in research and development at the company level is at least 250 thousand euros per year.

e) At least 20% of the planned investments are aimed towards investments in the use of green technologies in the process of product production and service provision and production of other products aimed at the reduction of the impact of climate change.

ALTUM shall evaluate the projects that have passed the LIAA selection. To receive a loan, the company shall correspond to the status of a large or medium enterprise, the project shall correspond to the sectors eligible for support, the planned investments in the project shall be at least in the amount of 10 million euros, the implementation of the project cannot be started before the receipt of the funding, as well as the planned project shall provide for investments to begin production or expand it. The loan shall be issued in the amount of the capital discount, and the amount of funding provided by other funders cannot be smaller than the ALTUM loan. The amount of the loan will be in the amount of at least 30% of the attributed costs of the investment project, depending on the place of project implementation and the size of the enterprise; the maximum amount of the loan will be 10 million euros.

ALTUM loan interest rate shall be equal to the interest rate of the other funder. If the project indicators are fulfilled, the capital discount shall be applied in three parts for each year of the loan. If in the entire monitoring period, the enterprise shall reach the indicators shown, the capital discount will be 100%, which means all the principal loan amount will be cleared.

Application procedure

Between 19 January and 18 April 2022 two separate applications shall be submitted to LIAA and ALTUM. The loan application to ALTUM shall be submitted concurrently or consecutively with the application for project selection implemented by ALTUM. The implementation of the investment project may only be started after the submission of the loan project and receipt of confirmation from ALTUM.
It is possible to apply for the LIAA selection electronically, after registration in the business development platform https://business.gov.lv/en/ filling in the application form.

However, one can apply for ALTUM funding in the remote customer service system https://www.mans.altum.lv, additionally filling in the customer form.

For a detailed study of the amendments to Cabinet Regulation No. 503 “Regulation for capital discount for investment projects for economic operators to enhance competitiveness” adopted on 6 July 2021, visit the unified portal for legal acts.

Information prepared by:
LIAA Communication and Information Department
Telephone: +371 29725674
Email: prese@liaa.gov.lv

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