Fundraising

Baltic fund targets €100m after EIB, pensions’ investment

The second infrastructure vehicle to target the region is seeking double-digit returns from an expected 10 investments.

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A Baltics-based private equity firm has raised €67 million from a group of pension funds and the European Investment Bank as it advances towards a €100 million target.

The BaltCap Infrastructure Fund will seek to invest in projects across Lithuania, Latvia and Estonia as it attempts to plug an infrastructure funding gap of €6 billion over the next five years. While BaltCap has previously made infrastructure investments in gas distribution, waste management and road construction, the fund is its first dedicated infrastructure vehicle.

It has been supported by the pension funds of SEB, Swedbank and Estonian bank LHV, as well as by Swedbank Life Insurance, Nordic Environment Finance Corporation and other institutional investors, together committing €47 million. The European Investment Bank has provided a further €20 million.

“Physical infrastructure such as electricity, heating, railways, roads, ports and airports suffer from a substantial deficit in terms of capacities and efficiencies,” said BaltCap Infrastructure Fund partner Sarunas Stepukonis. “With the strong support from international financial institutions and local pension funds we are able to address the infrastructure funding gap and help Lithuania, Latvia and Estonia to realise their infrastructure investments programmes. It is the first time in the region when the local pension fund assets will be deployed to develop infrastructure for future generations.”

Stepukonis told Infrastructure Investor that the fund expects to garner the remaining commitments within the next 12 months and is seeking “double-digit” returns. It will seek either majority or minority equity stakes across 10 investments.

The BaltCap fund is the second of its kind to launch in the region. Lithuanian fund manager Lords LB Asset Management in January 2016 launched the Baltic Energy and Infrastructure Fund, managed by former Lithuanian Energy Minister Jaroslav Neverovic. Targeting a €250 million hard-cap, the fund continues discussions with potential anchor investors.