EIF set to invest EUR 10 million in the Baltic States

EIF has recently committed EUR 10 million to be invested in two regional funds focused on innovative SMEs in Estonia, Latvia and Lithuania. The signing of these two funds represents the EIF's first ever venture capital investments in the Baltic States .

The Baltic Investment Fund III L.P. has been established to continue the investment strategy of the previous Baltic Investment Funds I and II. It aims to focus on companies involved in IT & communications, distribution & logistics, consumer products, manufacturing and infrastructure sectors. The EIF has agreed to invest EUR 7.5 million or about 15% of the total fund size.

In parallel to its participation in the Baltic Investment Fund III, EIF will invest EUR 2.5 million in the new Baltic SME Fund L.P. The Baltic SME Fund is tailor-made for the EU-PHARE guidelines providing support for smaller companies with smaller investment amounts and it involves, in addition to the EU PHARE programme, the EBRD as a co-investor.

Both funds are to be managed by Baltcap Management team, which has its headquarters in Helsinki (Finland) and additional offices and permanent staff in the capitals of the Baltic States, namely Tallinn, Riga and Vilnius. The management team has thus a Pan-Baltic investment approach facilitating cross-border operations.

Among the aims of these two Baltic funds, is to help a number of Baltic SME investees develop and grow their businesses, thereby assisting the countries concerned in their economic accession to the EU. As such, the EIF investments will contribute towards stepping up economic activities in the Accession Countries in preparation for their future EU membership.

The EIF is the European Union's specialised financial institution for venture capital and guarantees. Based in Luxembourg, the EIF was established in 1994 as a joint venture between the European Investment Bank (EIB), the European Commission and European banks and financial institutions. The EIB has recently become the majority shareholder of the EIF. The latter, with an investment potential of over EUR 3 billion until 2003, is now a major player in the European venture capital market. Its investment strategy focuses on the promotion of European technology.