BaltCap launches successor buyout fund focusing on the New Nordics

03 October 2019

BaltCap held the first close of BaltCap Private Equity Fund III (BPEF III) at €126 million, being above the initially targeted size subscribed by the existing investor base. The new fund will continue the proven and successful buy-and-build strategy of its predecessor funds, BPEF I and BPEF II, by making equity investments in mature innovative enterprises to build them into business champions.

The new fund will aim to make 8 to 10 platform investments in the Baltic and Nordic countries with enterprise values of these companies typically being between €10 to €50 million and the fund’s equity investment between €10 to €20 million.

Martin Kõdar, Managing Partner of BaltCap, emphasised that the new fund broadens the scope of BaltCap target markets. “In addition to the Baltics, which have been the core region for BaltCap, the fund will also focus on Finnish and Swedish companies with a Baltic nexus. The Nordic and Baltic economies are increasingly forming a larger, integrated market, the New Nordics, with enhanced business opportunities. BPEF III expects to be one of the facilitators of further business integration in the New Nordics,” Kõdar explained.

The investors committing to the fund include the European Investment Fund (EIF) investing partially through Baltic Innovation Fund 2 (an initiative created by cooperation between the Republic of Estonia, the Republic of Latvia, the Republic of Lithuania and EIF), the European Bank for Reconstruction & Development (EBRD), the Nordic Environment Finance Corporation (NEFCO), LHV pension funds, SEB pension funds from Estonia, Latvia and Lithuania, eQ Asset Management and also family offices. “We highly appreciate our long-term cornerstone investors’ continued trust in our team and strategy. It is a remarkable achievement for us and our region to exceed the targeted fund size at first close,” added Kõdar.

Pier Luigi Gilibert, Chief Executive of EIF commented: “The investment into BaltCap Private Equity Fund III marks our continuous successful cooperation. Moreover, it is the first investment from the Baltic Innovation Fund 2 – the joint Pan-Baltic initiative created to continue development of the Baltic private equity and venture capital market.”

Charlotte Ruhe, EBRD’s Managing Director for Central and South Eastern Europe said investing in BaltCap’s new fund is a good strategic fit with the EBRD’s priorities in the Baltics. “We are supporting the emergence of a stronger, more sustainable private equity sector through the provision of equity and quasi-equity financing at all stages of company development. We are pleased with the role BaltCap already has and will continue to have, through this fund, in providing scarce equity finance to companies across the Baltic states,” she said.

SEB Investment Management fund manager Endriko Võrklaev stressed that SEB’s Estonian, Latvian and Lithuanian pension funds are among the fund’s largest investors. „Today more and more growth stories can be found outside listed markets. We consider the local private companies a good match to the local pension funds with a long investment horizon. Our growing exposure to local economies also helps us to remain competitive against local inflation,” Võrklaev added.

Thor Thorsteinsson, Senior Financial Manager at the Nordic Environment Finance Corporation (NEFCO) highlighted the green investments that will be made through the fund. “We are very pleased to continue our good cooperation with BaltCap and to invest in one of their funds targeting the Pan-Baltic region for the second time. NEFCO’s involvement in the fund will result in substantially increased investments directed into companies contributing to a positive environmental impact, related for example to recycling, energy efficiency and green transport,” said Thorsteinsson.

New Nordics as a concept includes the traditional Nordic countries – Norway, Sweden, Finland, Denmark and Iceland – and the three Baltic countries Estonia, Latvia and Lithuania. Together these countries form a dynamically growing, technology-driven and diverse, yet synergy-providing business environment that opens up innovative business possibilities.

Photo by Raphael Koh on Unsplash

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