First Baltic fund launched in Lithuania

Focused on local PPPs, the privately managed vehicle expects a €100m first close and is eyeing a €250m hard-cap.

Lords LB Asset Management (Lords LB), a fund manager based in Vilnius, Lithuania, has launched what it claims is the first-ever infrastructure vehicle based in the Baltics.

The Baltic Energy and Infrastructure Fund (BEIF), which is seeking to raise about 60 percent of its dry powder from development banks and foreign institutions, expects a €100 million first close by the end of the second quarter of 2016. It has a €250 million hard-cap and an IRR target of 12 percent.

“As funding from European Union structural funds is decreasing, alternative sources of financing will be required by infrastructure and energy project developers,” said Tore Sandvald, BEIF chairman, in a statement. “Meanwhile global investors are discovering the Baltic States on their investment maps.”

The fund, which has a 15-year term with a possible five-year extension period, is primarily focused on public-private partnerships (PPP) in the transport and energy sectors. A prospective deal pipeline has already been identified, according to local agency Invest Lithuania.

Projects listed as potential investment targets include a PPP to rebuild the road between Vilnius and Utena, another PPP to renovate Vilnius’ lighting system, the Lithuanian airports concession and a cogeneration power plant in Vilnius.

“The fund should also help to close the financing gap between bank lending and equity,” said Irmantas Butkauskas, PPP team lead at Invest Lithuania. “Thanks to new PPP regulations adopted in 2015, the fund could also be a bidder in some tenders, or submit unsolicited proposals for new PPPs.”

Lithuania made moves last year to shake up its infrastructure market, approving amendments to its rules for the development and implementation of PPPs that now allow the private sector to initiate projects.