INVL Asset Management, one of Lithuania’s leading asset management companies, completed a first closing of the INVL Baltic Sea Growth Fund, a closed-end private equity fund intended for professional investors, at €106 million. The INVL Baltic Sea Growth Fund became the largest private equity investment fund in the Baltic countries.
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, backed by the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe, or Juncker Plan.
The EIF is committing ressources 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.
Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union said: "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 €4 billion of EFSI-induced additional investments in Estonia, Latvia and Lithuania."
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.”
“We are pleased with the successful completion of the first closing. 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,” said Darius Šulnis, the chairman of the board of INVL Asset Management. He said 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.
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. After the investment in the INVL Baltic Sea Growth Fund is made, Invalda INVL undertakes not to invest in private equity assets that comply with the fund’s strategy and to conduct its main investment activity through this fund.
The portfolio of INVL Baltic Sea Growth Fund will comprise of 8-12 investments. The fund seeks 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 to €30 million (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.
“We start the fund’s active investment activity by keeping our promises to the investors – in the nearest future it is scheduled to complete the first business acquisition transactions. We also continue negotiations on the other acquisitions of companies that fit the investment strategy. The team is analysing the market and looking for viable businesses that could expand or that are in need of strategic changes, as well as family businesses facing succession issues,” said Deimantė Korsakaitė, the executive partner of the INVL Baltic Sea Growth Fund.
She said that the fund’s team is seeking investments that meet the established criteria and those where the team could contribute to their development not just with monetary means, but also with it’s accumulated experience. “More than half of the capital committed to the fund will be invested in companies based and operating in Lithuania, Latvia or Estonia, whose operations we will seek to expand to the Baltic Sea region through organic growth and add-on acquisitions, following a “buy and build” strategy,” Deimantė Korsakaitė said.
The fund will seek to form a diversified portfolio of the Baltic Sea region companies and will focus on growth capital, buyout, and “buy and build” investments. The foreseen life of the fund is 10 years from the initial closing.
INVL Asset Management is part of the Invalda INVL group, whose companies manage pension and mutual funds, alternative investments, private equity assets, individual portfolios and other financial instruments. They have assets under management of more than €650 million, entrusted to them by over 190 000 clients in Lithuania and Latvia as well as international investors.
About the European Investment Fund
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses by helping them to access finance. EIF designs and develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.
The European Investment Bank (EIB) is the long-term lending institution of the European Union, owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
About the Investment Plan for Europe
The Investment Plan for Europe, or Juncker Plan, is one of the European Commission's top priorities. It focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.
The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB Group to invest in more, often riskier, projects. The EFSI is already showing concrete results. The projects and agreements approved for financing under the EFSI so far are expected to mobilise more than €379.8 billion in investments and support around 842,000 SMEs across all 28 Member States.
8 February 2019