Energy, Funds, Good for Business, Investments, Legislation, Lithuania

BEIF is the first locally based fund in the Baltic States to specialise in investments in energy and infrastructure.

As BEIF Board Chairman Tore Sandvald highlights, the new fund will play a key role in ensuring that companies participating in PPP projects have the financing they need. “As funding from European Union structural funds is decreasing, alternative sources of financing will be required by infrastructure and energy project developers,” states Mr Sandvald. “Meanwhile, long-term investors are interested in these types of projects, and global investors are discovering the Baltic States on their investment maps. Drawing on its local expertise and vast investment experience, BEIF will bring local, regional and institutional investors together with project developers. We have established the Baltic Energy and Infrastructure Fund with a view to combining assets and generating value across the different sectors,” explained Mr Sandvald.

BEIF has ambitious investment plans for 2016 and is already targeting a number of projects in Lithuania. The fund expects its first €100 million close by the end of the second quarter of this year. Final close is expected in the first quarter of 2017, and the fund’s hard cap is €250m. It is targeting a net internal rate of return (IRR) of 12% and has a term of 15 years, with a possible five year extension period. The fund is particularly interested in projects in the transport and energy sectors. Initial projects of interest that have been identified include: the PPP project for reconstructing the road between Vilnius and Utena, the PPP project for renovating Vilnius’ lighting system, the Lithuanian airports concession, and Vilnius cogeneration power plant.

Irmantas Butkauskas, the PPP Team Lead at foreign investment development agency Invest Lithuania, is keen to point out that the new financing on offer from BEIF will further strengthen the Lithuanian PPP field. “We are glad to hear that another skilled player is entering the Lithuanian PPP project market,” stated Mr Butkauskas. “Having a local fund targeted towards scalable PPPs in Lithuania will help to boost activity in this area. It will also make tenders more competitive, helping the public sector get better value for money in the projects it procures. In addition to this, the fund should also help to close the financing gap between bank lending and equity. Finally, thanks to new PPP regulations adopted in 2015, the fund could also be a bidder in some tenders, or submit unsolicited proposals for new PPPs.”

Almost 60% of BEIF investors are expected to be either developmental finance institutions or foreign institutional investors.  Lords LB Asset Management is licensed and regulated by the Bank of Lithuania and is audited by PwC and KPMG. SEB and Swedbank are the custodian banks of the company’s funds.