Baltic, Financial Services, Funds, Good for Business, Investments

The European Investment Fund (EIF) in February 2018 proposed for the three Baltic states to jointly form BIF II, a fund of funds, which would invest in the sub-funds to be created, which would in turn invest in early stage and expanding Baltic businesses' equity or offer them mezzanine financing, it appears from the explanatory notes accompanying the government's order.

The government approves a proposal by Minister of Entrepreneurship and IT Rene Tammist to participate in the fund with 26 mln euros via the state-owned financial institution Kredex. 2 mln euros of the sum will be paid this year, 5 mln next year, 8 mln in 2021 and 11 mln euros in 2022.

BIF II is to represent a 156 mln investment, with each Baltic government committing EUR 26 mln through their respective national agencies and EIF covering the remaining half, 78 mln euros.

As the outcome has been positive so far, BIF II will also be managed by EIF in accordance with best market practices, in a transparent way and in cooperation with the private sector, which means that in addition to the 156 mln euros by BIF II, 350 mln euros will be raised in private capital on the sub-funds' level and the instruments that will reach entrepreneurs are projected to total some 500 mln euros.

The investment strategy of BIF II is comparable to that of BIF I. By the end of 2017, five contracts with sub-funds had been entered into and a total of 100 mln euros has been invested in the sub-funds, while the private capital raised totaled 235 mln euros. So far, investments have been made in 29 businesses in the total amount of 138 mln euros, of which the share of BIF I is 42 mln euros.

BIF I has invested 25 mln euros in Karma Ventures Fund, 20 mln each in BaltGap Growth Fund, Livonia Partners Fund and BaltGap Private Equity fund as well as 15 mln euros in BPM Mezzanine Fund.