The Baltic Innovation Fund will invest 100 million euros into the enterprises of the Baltic States

With the agreement signed in Vilnius today, the European Investment Fund (EIF) and Estonia, Latvia and Lithuania are creating the Baltic Innovation Fund (BIF) with a goal to increase equity investments into the enterprises of the area. The total volume of the fund is 100 million euros, of which Estonia is investing 20 million euros through KredEx.

The Baltic Innovation Fund will invest 100 million euros into private equity and venture capital funds over the next four years to further developing equity investment into small and medium-sized enterprises (SMEs) to boost growth. The EIF is investing 40 million euros alongside investments of 20 million euros each from the national agencies of Estonia (KredEx), Latvia (LGA) and Lithuania (Invega).

According to Richard Pelly, the Chief Executive of the EIF, creation of the fund is a result of close cooperation between the EIF and the three Baltic States. “The goal of the fund is to create a long-term investment scheme that will attract additional private finance and implement the best market standards for equity investing in businesses. EIF is proud to have led this process and looks forward to the implementation of investments beginning in 2013.”

According to Andrus Treier, the new fund is a financing solution that has been missing from the Baltic market. “BIF is an excellent illustration of the three Baltic States acting together, enabling to make small capital markets together more attractive for investors and creating further financing possibilities for enterprises. The importance of the transaction is confirmed by the fact that the estimated volume of investments is comparable to the total volume of the venture capital market in Estonia.”

The investment process for the BIF will begin in 2013 when EIF will start to process transactions with selected Fund Managers. Each Fund manager will be expected to attract an additional amount of private finance from private investors and pension funds which will double the amount of investment capital of the fund up to a total of 200 to 250 million euros.

The goal of the European Investment Fund is to support the European small and medium-sized enterprises.

KredEx is a financing institution helping Estonian enterprises grow and expand more safely to foreign markets, offering subordinated loans, credit lines, credit insurance and guarantees with state guarantee.