MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Considers $27m Loan to BaltCap Private Equity Fund II for Small, Medium-Sized Enterprises in the Baltic Region

The UK-based European Bank for Reconstruction and Development (EBRD) recently revealed the pending approval of a EUR 20 million (USD 26.7 million) loan facility for the BaltCap Private Equity Fund II for investments in equity-related securities of small and medium-sized enterprises (SMEs) and small and mid-cap enterprises (SMCs) in the Baltic region. SMCs are companies with a market capitalization between USD 2 billion and USD 10 billion. BaltCap is a private equity and venture capital fund manager operating in the Baltic states of Estonia, Latvia and Lithuania. The Private Equity Fund II is intended to improve access to equity capital for SMEs and SMCs in the Baltics, facilitate strategies of consolidation of SMEs and SMCs to promote “regionalization” amongst the Baltic states, and promote improved corporate governance amongst the investee SMEs and SMCs. EBRD will not provide technical support to BaltCap as it has done in the past [1]. Further information on the loan is unavailable.

Financial information for BaltCap is unavailable. In 2007, EBRD invested EUR 20 million (USD 26.7 million) in the BaltCap Private Equity Fund I to support the growth of medum-sized companies in the Baltic region. In addition, EBRD has worked with BaltCap in three prior investment funds: Baltic Investment Fund I and II (1995), Baltic Investment Fund III (1999) and Baltic SME Fund (2001). In 2012, EBRD invested EUR 8.7 billion (USD 11.4 billion) in 388 projects across 34 countries.

By Jennifer Young, Research Associate

About BaltCap
BaltCap is a private equity and venture capital fund manager operating in the Baltic states of Estonia, Latvia and Lithuania. BaltCap has headquarters in Tallinn, Estonia; Riga, Latvia; and Vilnius, Lithuania. Since its inception in 1955, BaltCap has invested in approximately 50 companies. BaltCap’s other funds include the Baltic Investment Fund I and II, which are fully exited; Baltic Investment Fund III and Baltic SME Fund, which are fully invested; and BaltCap Private Equity Fund which is actively investing as of 2013. In 2009, the European Investment Fund (EIF) selected BaltCap to manage the Latvia Venture Capital Fund and Lithuania SME Fund, which are established under EIF’s Joint European Resources for Micro- to Medium Enterprises (JEREMIE) initiative. Financial information for BaltCap is unavailable.

About European Bank for Reconstruction and Development
The European Bank for Reconstruction and Development (EBRD) is a multilateral institution headquartered in London. The bank began operations in 1991 upon the agreement of 40 countries and is owned by 61 countries as well as the European Investment Bank and the European Union as of 2012. It aims to finance operations that are both commercially viable and assist development in 29 countries in Eastern Europe, Central Asia and North Africa. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs). In 2012, EBRD invested EUR 8.7 billion (USD 11.4 billion) in 388 projects across 34 countries.

Sources and Additional Resources

[1] European Bank for Reconstruction and Development Project Summary, “BALTCAP PRIVATE EQUITY FUND II,” http://www.ebrd.com/pages/project/psd/2013/44847.shtml

MicroCapital Story, November 21, 2012, “MICROCAPITAL BRIEF: Part of $38b Commitment From European Investment Bank, World Bank, European Bank For Reconstruction and Development To Support SMEs,” https://www.microcapital.org/microcapital-brief-part-of-38b-commitment-from-european-investment-bank-world-bank-european-bank-for-reconstruction-and-development-to-support-smes/

MicroCapital Universe Profile: BaltCap, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=BaltCap

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD), http://microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+%28EBRD%29

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