The Baltic Innovation Fund 2 is signed, envisioning over EUR 300m to finance Baltic SMEs
06 August 2019
The continuation of the Baltic Innovation Fund initiative has been ensured through the signature of the ‘Baltic Innovation Fund 2 agreement’, agreed by the European Investment Fund (EIF) and the three Baltic States.
Over the next five years, the Baltic Innovation Fund 2 (EUR 156m) will invest in private equity and venture capital funds that focus on the Baltic States, with the goal of further developing equity investments into small and medium-sized enterprises (SMEs), to boost growth in the region.
Three national promotional institutions – KredEx (Estonia), Altum (Latvia) and Invega (Lithuania) – will each commit EUR 26m, with the EIF contributing a further EUR 78m to the ‘Baltic Innovation Fund 2’. In addition, the selected fund managers will have to bring in financing from private investors, which would bring the total amount available for investments into the Baltic companies to over EUR 300m.
Pier Luigi Gilibert, Chief Executive of the European Investment Fund:
“The Baltic Innovation Fund is a perfect example how co-operation between the three Baltic States can bring powerful impact on the Baltic equity market. Via the BIF initiative, more than EUR 435m has been fundraised for investment in local companies, and we are proud that this capital has attracted local pension funds to participate more actively in the local ecosystem. Our continued partnership under the Baltic Innovation Fund 2 will further contribute to the development and long term sustainability of the Baltic equity market”.
Juris Vaskāns, Member of the Board at Altum:
“The initiative of the Baltic Innovation Fund 2 will be a significant catalyst for the accessibility of private equity and venture capital to the enterprises of the Baltic States. Currently, in the Baltics, equity investments to GDP are still significantly lagging behind the European average. Therefore, we see a big potential increase in BIF2 capital inflows that will amount to up to EUR 100 million in Latvia alone. BIF2 will mainly focus on stable growth stage investees, thus perfectly supplementing the existing Altum venture capital funds that cover a variety of development stages, starting from early pre-seed to growth stage companies.”
Lehar Kütt, Chief Executive of KredEx:
“The first Baltic Innovation Fund is an excellent illustration of the three Baltic States acting together and making small capital markets more attractive for investors and creating further financing possibilities for enterprises. With the Baltic Innovation Fund 2, we will continue the positive development of our local equity markets and it will surely be of key importance in helping Baltic SMEs grow and hence assure further economic growth in the region.”
Kęstutis Motiejūnas, Chief Executive of Invega:
“It is very important to ensure access to private equity for local companies in all stages of their development, as well as to attract larger market players and institutional investors to invest in the Baltic States. The Baltic Innovation Fund had the power to achieve all of this. Therefore, at the end of the Baltic Innovation Fund’s investment period, the continuity to be ensured by the Baltic Innovation Fund 2 is particularly required”.
The Baltic Innovation Fund 2 will be invested into equity funds selected by the EIF. Each fund manager will have to attract at least the equivalent amount of private finance from private investors, which will double the amount of investment capital within the initiative.