The European Bank for Reconstruction and Development (EBRD) has commited to investing €20 million in the BaltCap Infrastructure Fund (BinF), the Ministry of Finance has announced.
The President of EBRD, Sir Suma Chakrabarti signed the agreement late last week during a signature ceremony held at the Ministry of Finance in Tallinn. With the additional contribution from Citadele pension funds as well as existing investors, BInF has thus reached its hard cap of €100 million.
Minister of Finance of Estonia Toomas Tõniste stated that “We are proud to welcome this investment in the Baltcap Infrastructure Fund, the first infrastructure fund in the Baltics with the goal of acting as a catalyst for private investors to finance infrastructure projects.”
”The Fund’s investment strategy addresses the rising investment needs in the region, in transport, energy efficiency, and renewable energy sectors,” Mr. Tõniste went on.
The fund follows a regulation last year which initiated funds in the form of limited partnerships, the Minster of Finance went on.
”This fund regime has been designed along the lines of the best qualities of limited partnership structures of various countries,” Mr. Tõniste said.
”We are glad that more and more regional venture capital funds managers, including BaltCap, are using this new Estonian limited partnership type of fund.” he continued.
The EBRD’s role
Sir Suma Chakrabarti added that “we are pleased to support the BaltCap Infrastructure Fund with a sizeable €20 million investment. The fund will address the scarcity of infrastructure equity funding in the region and promote the private financing of crucial infrastructure in all three Baltic States.
”With the fund’s strong commitment to the climate change mitigation, the Bank’s support of the BaltCap Infrastructure Fund sets an important milestone in the EBRD’s promotion of green agenda in the private equity industry,” he went on
With the €20 million equity commitment, the EBRD becomes the second anchor investor of the BInF together with the European Investment Bank, which contributed the same sum in investment last year.
“For us it was imperative to attract the EBRD as one of the anchor investors of the Fund, especially because of their institutional expertise and commitment to the growth of the Baltic region,” said Šarūnas Stepukonis, Partner of BaltCap Infrastructure Fund.
”We are humbled with the trust of our investors, which put us in a unique position to provide unmatched long-term financing solutions for sustainable homeland infrastructure development,” he went on.
As noted, Citadele pension funds also committed to invest in BInF. Together with an increase in commitments from already existing investors, the total size of the fund has reached €96.1 million.
The BInF also receives an additional investment from Citadele pension funds, bumping up the total amount of the fund to €100 million.
BaltCap, the largest private equity investor in the Baltic region, launched the BInF in July last year with a target size of €100 million. The fund invests in transport, energy and social infrastructure development across Lithuania, Latvia, and Estonia.
Since the start of its operation, the fund has invested €16 million in a 48MW biomass plant in Vilnius, Lithuania, due to be operational by the beginning of 2019, which will generate nearly 10% of Vilnius’ heating requirements..
Investors in the BInF include all of the largest pension funds in the Baltic States, one life insurance company, and various international financial institutions.
More than half of the funds are raised from pension funds based in Lithuania, Latvia, and Estonia, making it the largest combined local pension funds commitment to Baltic States-focused private equity funds to date.