INVL Asset Management, one of Lithuania’s leading asset management companies, has completed a first closing of the INVL Baltic Sea Growth Fund, a closed-end private equity fund at 106 million euros, becoming the largest private equity investment fund in the Baltic States.
The fund’s anchor investor is the European Investment Fund (EIF), part of the European Investment Bank (EIB) Group, which has committed to invest 30 million euros, backed by the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe, or Juncker Plan.
The EIB Group is committing resources from the Baltic Innovation Fund, a Fund-of-Fund initiative launched with the governments of Lithuania, Latvia and Estonia in order to boost equity investments made into Baltic small and medium businesses with high growth potential.
“We are pleased with the successful completion of the first closing,” said Darius Šulnis, the chairman of the board of INVL Asset Management. “It’s important that investors in the fund include both international financial institutions who see the Baltic region’s business potential and local investors who know the market and Invalda INVL well. For our part, we’re actively working on acquisitions and intend to conduct several transactions already in the next six months, investing in Baltic companies with the potential to become regional leaders or operate successfully on global markets.” Mr Šulnis added that a second and final closing of the fund is also scheduled in 2019, with the intention of reaching the fund’s target size of 200 million euros.
EIF Chief Executive Pier Luigi Gilibert said: “We are very pleased to be supporting the first closing of the INVL Baltic Sea Growth Fund. EIF’s partnership with the Baltic governments via the Baltic Innovation Fund is crucial for developing this private equity market, giving local independent teams like Invalda INVL an opportunity to set up private equity funds and attract investors for companies in the region.”
Valdis Dombrovskis, European Commission vice-president for the euro and social dialogue, also in charge of financial stability, financial services and capital markets union added: “The INVL Baltic Sea Growth Fund will help Baltic businesses expand beyond their regional market, create value and ultimately, jobs. I congratulate the three Baltic States on being in the top 10 of countries benefiting the most from the Juncker Plan, with almost four billion euros of EFSI-induced additional investments in Estonia, Latvia and Lithuania.”
Also investing in the fund are Estonia’s LHV pension funds, INVL pension funds and other financial and private investors, with some of them investing through the INVL Baltic Sea Growth Capital Fund intended for informed investors. In order to align the interests of the investors and the asset managers to the maximum extent, Invalda INVL and all the members of the fund’s investment committee (partners) are investing amounts that are significant to them in the fund – in total at least 20 million euros.
The portfolio of INVL Baltic Sea Growth Fund will comprise of 8-12 investments. The fund is looking to invest in medium-size companies with an attractive risk-return profile, providing them with capital for further growth. In its investments, the fund will focus on controlling or significant minority stakes and will play an active role in the management of target companies, aiming to significantly increase their value over the long term.
The fund will make investments of 10 million euros to 30 million euros (or larger amounts with co-investors) in mature companies that can compete on global markets and have big potential for growth in value. Emphasis will be on transactions bigger than those that private equity players in the Baltic countries undertake, but smaller than those that interest the largest international private equity and strategic investors.