Baltic Business News: Expert: venture capital and private equity investment activity in Baltics to grow

Speakers at last week’s annual Baltic M&A and Private Equity Forum 2013 in Riga agreed that high growth potential and a strong need for new investment will significantly increase private equity and venture capital investment activity in upcoming years.

During the conference organised by law firm SORAINEN this feeling was confirmed by news that Livonia Partners, a private equity fund freshly created by the former LHV investment team, had been chosen by the Baltic Innovation Fund for a EUR 20 million investment. The aim of the fund is to gather EUR 50-85 million in total to be invested in 8-12 Baltic companies.

“The Livonia fund and funding from the Baltic Innovation Fund in general together with local initiatives will hopefully in the near future bring more funding to all the Baltic States. This will enliven the whole private equity market, so that money should reach companies on better terms, which so far based on a recent study by Enterprise Estonia has been a significant obstacle for companies’ growth,” commented Toomas Prangli, head of the SORAINEN regional M&A and Private Equity Team.

EBRD expert Agris Preimanis reported that private equity investments in the Baltics compared to GDP are 10 times smaller than the European average. Even those investments are up to 90% from government agencies – whereas in the rest of the Europe the reverse is the case and the market is dominated by private investors. “But” added Preimanis, “small can also be attractive especially if comprehensive improvements to the private equity and venture capital ecosystem are implemented. Input to development is needed from both private businesses and state agencies”.

Baltic and Central and Eastern Europe country experts were unanimous in noting that the Baltics need to increase productivity and competitiveness to attract investor interest – this is actually supported by the fact that Europe’s competitiveness in the international arena is slowing down. Discussion on what the Baltic governments say and do concluded that the eco-systems for Latvian and Lithuanian private equity and venture capital funds are very good, one of the few areas where these two countries are ahead of Estonia (for example, in acquiring JEREMIE funds). The Estonian Government recognised they are the last to come to the “dance floor”, but developments and investment plans are actively on-going (EUR 60 million in structural fund investments according to the latest plans).

The Baltic M&A and Private Equity Forum was organised this year for the fourth time by law firm SORAINEN together with business media outlets Äripäev, Dienas Bizness and Verslo Žinios as well as with Private Equity & Venture Capital Associations from Estonia, Latvia and Lithuania.

Article was published on Baltic Business News website on 31 Oct 2013.

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