BaltCap and its Infrastructure Fund Investors agree the main terms of a recovery plan

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BaltCap has reached an agreement with the investors of BaltCap Infrastructure Fund I (Fund) on the main terms of the recovery plan related to the recent embezzlement case in the Fund. A common understanding has been established how the Fund recovers all of the €40.4 million misappropriated from the Fund’ s portfolio companies, ensuring that investors suffer no losses.

Peeter Saks, member of the Board at BaltCap, says “The agreed terms serve the best interests of the Fund and its investors, ensuring that investors suffer no losses. This is a significant milestone in our joint efforts to restore the financial stability and integrity of the Fund.” “We extend our appreciation to all our investors. Their dedication and expertise have been crucial in shaping a robust recovery plan,” Saks adds.

“Now that the main terms of recovery plan have been agreed we can focus fully on implementing the plan,” Saks says.

Saks confirms BaltCap funds perform well and their portfolio companies are generating solid returns. “BaltCap remains committed to be among the leading private equity managers in the Baltic region,” Saks says.

The parties have agreed not to disclose the details of the recovery plan.

 

Additional information

Peeter Saks

Member of Management Board

Peeter.Saks@baltcap.com

www.baltcap.com

BaltCap Appoints Ege Metsandi CEO

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BaltCap has appointed a seasoned financial industry executive, Ege Metsandi, the company’s Chief Executive Officer and member of the Board, effective August 5, 2024. This is a new role in the organisation aimed at leading organisational change and future growth in line with the structural and governance changes announced by BaltCap in the beginning of 2024.

Ege Metsandi has more than 20 years of experience in the financial industry, having previously held managerial positions at numerous Nordic and Baltic financial institutions such as Swedbank, Swedbank Investment Funds, Nordea, and Trigon Capital. Ege has worked in financial services, including fund management, investment management, capital markets trading, and credit and business information services. She has a solid track record in driving growth through business development, enhancing operational efficiency, and managing organisational change.

In her new role, Metsandi will be responsible for the general management of BaltCap both as a CEO and a member of the Board. Her focus will be on further strengthening the corporate governance and risk management systems and leading the organisational change. The current Managing Partners will remain dedicated to the investment management of BaltCap’s funds.

Peeter Saks, member of the Board at BaltCap, says: “We are pleased to welcome Ege Metsandi to BaltCap. Ege is a seasoned financial industry executive bringing valuable experience from the regulated financial sector. Her successful track record as a leader who has driven growth and efficiency in various businesses, brings critical new skills to our Management Board and helps to steer BaltCap towards future growth.”

“I am excited to join BaltCap and lead such an experienced team,” says Ege Metsandi. “I have strong faith in private equity, as it provides an important contribution to local economies by giving investors access to opportunities not available in the public markets. Additionally, private equity generates substantial returns for investors. I absolutely look forward to working with the BaltCap team,” Metsandi added.

BaltCap completes the main stage of the internal investigation into misconduct

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The main stage of the internal investigation launched by BaltCap and supported by external experts into the misconduct of former manager of the BaltCap Infrastructure Fund Šarunas Stepukonis has been completed after 3.5 months of investigation. It reveals that the total amount embezzled from the Fund’s portfolio companies is €40.4 million. BaltCap is now planning changes in organisational setup and management.

Main findings from the core part of the internal investigation

The main stage of the internal investigation addressed the portfolio company level in BaltCap Infrastructure Fund I. According to the investigation, the total amount embezzled by Šarunas Stepukonis is €40.4 million. Most activities related to the outflow of funds were executed in 2021–2023. No irregular activities were detected in the Fund itself. The transactions took place in portfolio companies, including their subsidiaries, in Lithuania and Poland.

According to the investigation, no evidence was found indicating any collusion with other BaltCap team members. The investigation reveals that the embezzlement was facilitated by the creation and submission of an extensive number of falsified and fictitious documents, and possibly other criminal acts and violations of fiduciary duties by Šarunas Stepukonis. The embezzled amounts were transferred to various gambling facilities (Olympic Casino Group) and a securities trading platform (Interactive Brokers).

BaltCap learnings and steps forward

“When looking back at the chain of events, we admit that the safeguards put in place in BaltCap were not meant to render the protection against outright fraud and embezzlement, especially in the portfolio companies and on their subsidiary levels. We did not envision all the specifics entailed with developing greenfield projects compared to a more traditional buyout strategy,” Dagnis Dreimanis, Simonas Gustainis, Martin Kõdar and Peeter Saks, the managing partners of BaltCap, say in their joint resolution.

“We are very aware of and deeply regret the damage this incident has caused to the trust we have built over the years as well as the negative impact it might have on the whole Baltic PE and VC ecosystem. We can assure that we are addressing the current situation with the utmost seriousness, and BaltCap is fully committed to rebuilding the trust and solving the situation in a responsible manner,” the managing partners of BaltCap emphasize.

Additional control measures were introduced on portfolio level immediately after the discovery of the misconduct to make sure that a similar incident could not happen again. With the following steps, the focus is on further strengthening of BaltCap’s risk management and financial controls. “We also foresee changes in operational management and structure of the organization. Though the main part of the internal investigation has been completed, the investigation is still ongoing and will take a while, because of the complexity of the case. Changes will come, also new policies and procedures will arise from thorough risk analysis,” the managing partners of BaltCap state.

In addition to further strengthening risk and control management, the BaltCap Infrastructure Fund’s portfolio companies have taken all relevant measures to reclaim the embezzled amounts, and have submitted claims against the counterparts who have received ill-gotten profits.

“We have been working diligently to avoid any further damage to the fund and the value of its portfolio,“ the managing partners of BaltCap say. Regardless of the damage caused to the BaltCap Infrastructure Fund’s portfolio companies, they continue to carry out their business activities, and the fund is profitable—the value of the fund portfolio is still considerably above the invested cost. “This incident does not affect the funds of other BaltCap investment strategies,” the managing partners of BaltCap conclude.

Since its inception, investors have invested €663 million across BaltCap funds, and the total value of these investments, including distributions already made to investors, has grown to €951 million. The average annual return of realised investments stands at 18%.

BaltCap is the largest and most experienced private equity investor in the Baltics covering buyouts, growth, venture, and infrastructure investments. Since 1995, BaltCap has invested in over 120 companies across a wide range of industry sectors and raised aggregate capital of over €900 million. BaltCap has a team of 40 investment professionals working across Tallinn, Riga, Vilnius, Warsaw, Stockholm and London offices.

BaltCap terminated the contract with Infrastructure Fund partner 

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BaltCap terminated the contract with BaltCap Infrastructure Fund Partner Šarunas Stepukonis and contacted the Lithuanian authorities after the Fund’s financial directors discovered misconduct. Simonas Gustainis, one of the four Managing Partners of BaltCap, has assumed the role and has been appointed the head of BaltCap Infrastructure strategy. 

The change in the leadership of the BaltCap Infrastructure Fund is part of a set of measures taken to address the misconduct, which came to light in the Fund’s portfolio companies, where Šarunas Stepukonis was a member of the management board. The misconduct was revealed during a regular review by the Fund’s financial directors, and it has resulted in a financial loss. The loss is finite, and the misconduct is isolated to one person and to BaltCap Infrastructure Fund – specifically to some of its portfolio companies – and does not affect the performance of any other BaltCap-managed funds.  

“We engaged an external consultant to perform a special audit and contacted the Lithuanian authorities. In addition to finding out exactly why and how this took place, we have already started implementing a series of steps to strengthen the management and control procedures to ensure nothing similar can happen again. Integrity and ethics have been the cornerstones of our culture and business conduct, and we take this matter very seriously, we will compensate the losses to the Fund. We informed all our investors and other key stakeholders and have included them in our efforts to carve out a clear path forward, ” said Simonas Gustainis, one of the Managing Partners of BaltCap. 

BaltCap receives full alternative investment fund manager’s licence

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BaltCap, the largest private equity fund manager in the Baltics, has been granted a full alternative investment fund manager (AIFM) licence by the Estonian Financial Supervision and Resolution Authority (EFSA). The licence allows BaltCap to further internationalise its services, and engage new professional investors across Europe. BaltCap is the first dedicated PE house in Estonia to receive a full AIFM licence.

The AIFM licence signifies BaltCap’s transition from operating solely under the light supervision regime available for managers of small alternative funds (AUM under EUR 500 million), to operating as a fully- regulated and EFSA-supervised fund manager. This enables BaltCap to take advantage of the AIFM passport regime and provide its services, as well as market its funds cross-border throughout the European Union (EU). This positions the firm to tap into a broader network of investors seeking reputable and compliant private equity investment opportunities.

Maido Lillemets, Head of Legal and Compliance at BaltCap, explains that the AIMF licence is part of the EU’s regulatory framework designed to harmonise the oversight and operation of alternative investment fund managers in the EU. “Its requirements encompass various aspects, including risk management, reporting, investor protection, operational procedures, and capital requirements. Attaining this licence is a notable achievement that validates BaltCap’s adherence to these rigorous standards by the Estonian FSA. It serves in the best interest of ensuring the investors’ capital is in safe hands,” Lillemets says.

Martin Kõdar, Managing Partner at BaltCap, says gaining the licence marks a new stage of organisational and business growth for BaltCap: “BaltCap has witnessed remarkable growth in recent years. We have launched new investment strategies and attracted new investors, and we have broadened our target markets and helped our team to grow. Receiving the full AIMF licence is a mark of quality, which underscores our dedication to maintaining the highest levels of transparency, professionalism, and regulatory compliance as we continue to grow. Most importantly, it supports us on our mission to build regional companies into international business champions, and deliver exceptional investment solutions to our investors.“

BaltCap to become the majority shareholder of HansaMatrix

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BaltCap, the largest private equity fund manager in the Baltics through its company Emsco, will become the largest shareholder of the high-tech company HansaMatrix. BaltCap has successfully concluded the voluntary share purchase offer, through its Private Equity Fund III, by acquiring 93.1% of HansaMatrix shares.

Juris Pārups, Investment Director at BaltCap, is content that HansaMatrix’s voluntary share purchase offer has been successfully concluded. “We are grateful to HansaMatrix’s shareholders for entrusting us. The positive outcome and such active participation of shareholders demonstrate that the investors felt the offered share price fairly reflected the company’s value and offered an attractive premium. The new ownership structure will now allow the company to better raise additional capital to unlock the company’s further growth potential and thereby also help to boost the economy in the Baltics,“ Pārups commented.

Given that SIA Emsco will acquire more than 90 percent of HansaMatrix’s voting rights, SIA Emsco, per Takeover Law, will have the right to redeem the shares of Hansamatrix held by remaining shareholders without their consent. “SIA Emsco intends to execute this right in accordance with the Takeover Law,” Pārups stated.

BaltCap plans to propose delisting from the regulated market. Pārups noted: “The delisting of HansaMatrix will allow us to focus on the long-term development of the company. It is a common global practice for companies to enter the stock market at certain stages of their development and, similarly, to exit when the market circumstances change.”

According to law, initiating the delisting of shares from the regulated market requires approval from at least 75% of the shareholders.

BaltCap’s offer was valid for 30 days – from 2 March 2023 to 31 March 2023.  The voluntary share purchase offer price was 8,50 EUR per share, which was a 22% premium on the price at the end of 2022 and a 12% premium on the price of 16 February 2023, the last trading day prior to the announcement of the intention to launch the offer.

In November 2022, the Competition Council of Latvia decided to allow BaltCap’s company Emsco to acquire HansaMatrix.

Please note that complete and detailed information on the rights and obligations of all interested parties in the voluntary takeover bid is provided in the Takeover Law and the respective takeover prospectus, as approved by the Bank of Latvia, and the foregoing in no way modifies the information contained in the takeover prospectus or terms or conditions of the offer.

About BaltCap Private Equity Fund III

Private Equity Fund III (BPEF III) invests in innovative companies in the Baltic and Nordic countries following buy-and-build strategy. BPEF III was established in co-operation with European Investment Fund (EIF), the European Bank for Reconstruction & Development (EBRD), the Nordic Environment Finance Corporation (NEFCO), LHV pension funds, SEB pension funds from Estonia, Latvia and Lithuania, eQ Asset Management and also family offices. EIF has invested through Baltic Innovation Fund 2 (BIF 2, an initiative created by cooperation between the Republic of Estonia, the Republic of Latvia, the Republic of Lithuania and EIF) and EIF’s investment in BPEF III also benefits from the financial backing of the European Union under the European Fund for Strategic Investments (“EFSI”) set up under the Investment Plan for Europe. The purpose of EFSI is to help support financing and implementing productive investments in the European Union and to ensure increased access to financing.

BaltCap invites HansaMatrix shareholders to take the opportunity now to sell their shares at an attractive price

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BaltCap, the leading private equity fund manager in the Baltics, will launch a voluntary share purchase offer for HansaMatrix through its company Emsco starting on 2 March. The offer presents a unique opportunity for HansaMatrix shareholders to sell their shares at the attractive price of EUR 8.50 per share.  The offer is valid for 30 days starting from 2 March till 31 March at 4pm.

BaltCap’s offer represents an opportunity for the company’s shareholders to earn a premium on their investment – the price per share is 22% higher than at the end of 2022 and 12% higher compared with the closing price on 16 February 2023, the last trading day prior to the announcement of the intention to launch the offer.

“We are excited to announce a voluntary share purchase offer for HansaMatrix. This is a great opportunity for shareholders to sell their shares at a premium price. BaltCap’s objective is to achieve a minimum of 75% stake in the company, which requires the active participation of all shareholders, including retail investors, in this offer. If this target is not met, HansaMatrix will continue with its current ownership structure. We recommend HansaMatrix investors use this opportunity now and invite interested parties to review the prospectus in order to make an informed decision. At BaltCap, we are committed to ensuring a smooth transaction that is in the interest of all stakeholders,” Juris Pārups, Investment Director at BaltCap.

In case of a successful bid, BaltCap will initiate the delisting of HansaMatrix from the regulated market in accordance with the procedures set out in the law. According to Article 14 of the Share Purchase Law, initiating the delisting of shares from the regulated market requires approval from at least 75% of the shareholders.

Investors who decide not to accept voluntary purchase offer, will become minority shareholders in a non-listed company. In practice, it may mean less liquidity and less opportunity to sell the shares in the future.

As the offer price is above the mandatory purchase offer price, no additional mandatory offer will be made post-transaction.

What should shareholders do?

Upon acceptance of the offer, HansaMatrix shareholders are required to contact their bank or investment brokerage firm where they have their securities account. It takes only a few simple steps to proceed. The offer is valid for 30 days from the publication of the prospectus on the Nasdaq Baltic website from 2 March until 31 March at 16.00. It’s important to note that the offer has a set timeframe, so shareholders who wish to participate should not delay taking action.

Please refer to:

Prospectus – the detailed terms and conditions of the offer: here

The Bank of Latvia has authorized the voluntary share purchase offer, and the Competition Council of Latvia has allowed BaltCap’s company Emsco to acquire HansaMatrix.

About BaltCap

BaltCap is the largest and most experienced private equity investor in the Baltics covering buyouts, growth, venture, and infrastructure investments. Since 1995, BaltCap has invested in over 100 companies across a wide range of industry sectors and has raised aggregate capital of over €700 million. BaltCap has a team of 35 investment professionals working at its Tallinn, Riga, Vilnius, Warsaw, Helsinki and Stockholm offices.

Emsco Ltd is a company set up to implement the voluntary share purchase process of HansaMatrix.

Please note that full and detailed information on the rights and obligations of all interested parties in the voluntary takeover bid is provided in the Takeover Law and the respective takeover prospectus, as approved by the Bank of Latvia, and the foregoing in no way modifies the information contained in the takeover prospectus or terms or conditions of the offer.

Additional information:

Juris Pārups
Investment Director
Juris.Parups@baltcap.com
www.baltcap.com

BaltCap plans to make a voluntary share purchase offer to HansaMatrix shareholders

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BaltCap, the leading private equity fund manager in the Baltics, through its company Emsco, has submitted to the Bank of Latvia a prospectus for the voluntary share purchase offer of JSC HansaMatrix to acquire at least 75% of its voting shares. According to the prospectus, the purchase price per share of the electronic manufacturing services company HansaMatrix will be EUR 8.50.

The offer will be effective upon the Bank of Latvia’s decision to authorise the voluntary share purchase offer.

“BaltCap managed fund has been a minority shareholder of HansaMatrix for more than four years and we have had the opportunity to follow the company’s development. As a private equity investor, our goal is to help promising companies grow and become leading businesses in the region and beyond. We are certain that HansaMatrix has a better chance to accelerate growth with a more consolidated shareholder structure. We believe we are offering an attractive price to HansaMatrix shareholders, which is a 22% premium on the price at the end of 2022 and 12% premium on the price of 16 February 2023,” says Juris Pārups, Investment Director at BaltCap.

If the voluntary share purchase offer is successful, BaltCap intends to propose the delisting of HansaMatrix from the regulated market.

In November 2022, the Competition Council of Latvia already decided to allow BaltCap’s company Emsco to acquire HansaMatrix.

BaltCap managed fund currently owns 9.92% of HansaMatrix shares.

The offer will be valid for 30 days

This offer is valid for 30 days from the date of publication of the prospectus on the Nasdaq Riga website. The exact start and end date of the voluntary share purchase offer will be determined after all authorisations have been received, and it will be communicated to all shareholders.

Upon acceptance of the offer, HansaMatrix shareholders will be required to contact their bank or investment brokerage firm where they have their securities account.

About BaltCap

BaltCap is the largest and most experienced private equity investor in the Baltics covering buyouts, growth, venture, and infrastructure investments. Since 1995, BaltCap has invested in over 100 companies across a wide range of industry sectors and raised aggregate capital of over €700 million. BaltCap has a team of 35 investment professionals working across Tallinn, Riga, Vilnius, Warsaw, Helsinki and Stockholm offices.

Emsco Ltd is a company set up to implement the voluntary share purchase process of HansaMatrix.

Please note that full and detailed information on the rights and obligations of all interested parties in the voluntary takeover bid is provided in the Takeover Law and the respective takeover prospectus, as approved by the Bank of Latvia, and the foregoing in no way modifies the information contained in the takeover prospectus or terms or conditions of the offer.

Additional information:

Juris Parups
Investment Director
Juris.Parups@baltcap.com
www.baltcap.com

BaltCap invests in solar energy generation in Latvia to enhance the energy independence in the Baltics

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BaltCap Infrastructure Fund, AJ Power group and AJP Capital’s Solar Core Plus Fund have signed an agreement to establish a joint venture to develop solar energy generation in Latvia. 30 MW solar farms will be built over the next three years. The plan also foresees expansion across the Baltics and increasing the capacity of the solar plant portfolio to 100 MW.

Matīss Paegle, Investment Director at BaltCap, says: “In this project, we are joining forces with AJ Power – the largest private PV developer in Latvia. This investment will contribute to both Latvia’s energy independence and the achievement of the sustainability goals. Green energy is our future, which means not only environmentally sustainable operations, but it also has a real economic basis.”

Roberts Samtiņš, the CEO of AJ Power group, says: “In Latvia, solar energy has become one of the most attractive investments in the market. Due to several circumstances, now is the best time for implementation of such large-scale solar parks: first of all, it is the European Green Deal, second, the rapid increase in energy prices and, third, the need to reduce Latvia’s dependence on energy supplied from third countries. The recent situation has only reaffirmed the need for such projects to diversify production capacity and stabilise electricity costs in the long term, preventing uncontrolled increases in electricity prices. This is also confirmed by the fact that in recent years we have already implemented many significant solar panel projects in Latvia, which serve as excellent examples of the great potential of solar energy.”

Didzis Bērziņš, Member of the Council at AJP Capital, adds: “We are thrilled to announce a joint venture among Solar Core Plus fund, BaltCap infrastructure fund and AJ Power in developing industrial scale photovoltaic electricity generation parks throughout Latvia and beyond. Today the initiative is especially important in the context of EU member state efforts to reduce energy dependency and in the context of the world’s efforts to counter looming negative effects of the climate change. The joint initiative will bring together extensive experience in renewable energy project development, large scale infrastructure project financing experience and determination for success.”

 

BaltCap invests in Nord Security, a global leader in internet privacy and security solutions

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BaltCap together with lead investor Novator Ventures, General Catalyst and Burda Principal Investments participated in the $100M financing round to Nord Security, a global leader in internet privacy and security solutions, to expand the company’s product suite and enterprise footprint and accelerate the growth of its consumer cybersecurity segment. Angel investors including Ilkka Paananen (CEO, Supercell), Miki Kuusi (CEO, Wolt) and Matt Mullenweg (CEO, Automattic) also joined the round.

“Nord Security is one of the most impressive growth stories coming from the Baltics, a thriving region that has already created more than ten unicorns. BaltCap Growth Fund is excited to join Nord Security on their journey of building a radically better internet with modern internet privacy and security solutions,” says Kornelijus Celutka, Partner at BaltCap.

Tom Okman, co-CEO and co-founder at Nord Security, said: “Ten years ago, we set out to create security and privacy tools which would help create a safer and more peaceful online future; today, millions of people trust our products every day to protect them. We are profitable and have been bootstrapped until today, but in our investors, we have found partners who believe in our mission as much as we do, which will allow us to grow faster and double down on our aspiration to build a radically better internet. We’re also humbled to play a part in helping Lithuania, a fiercely entrepreneurial country, enter into a new era of technological innovation.”

Nord Security was founded in Lithuania in 2012 by Tom Okman (co-CEO) and Eimantas Sabaliauskas (co-CEO) to create an internet security and privacy tool that was easily accessible for everyone. Today, Nord Security’s suite of products is trusted by millions of consumer users worldwide, as well as by a range of businesses, including the likes of Calendly, Adobe, Shutterstock and Vinted, for advanced threat protection against complex and evolving cyberthreats. Nord Security, which operates in 20 countries globally, is continuing to expand rapidly with over 200 open positions and 50% YoY headcount growth.

BaltCap managed funds increasingly focus on the fast-growing companies of the Nordic region. NordicNinja VC fund, a joint venture by BaltCap and JBIC IG Partners, has invested already in four companies with unicorn status – Bolt, Veriff, Einride, and Voi. Marek Kiisa, Managing Partner at NordicNinja says he is thrilled that BaltCap has invested in the most awesome Lithuanian company. “This gives us an opportunity to use our extensive knowledge and create synergies in BaltCap funds when building deep tech companies that will change the world,” Kiisa added.

BaltCap enters the pet care market to boost Pan-Baltic growth of the sector

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BaltCap Growth Fund together with I Asset Management, a Lithuanian private equity firm, entered the veterinary market by investing in Dr. VET, which operates five veterinary clinics in Vilnius. IAM Petcare Growth Fund acquired 65% of shares of Vet Ventures, a holding company of the clinics, BaltCap Growth Fund’s stake is 35%. New owners seek growth through organic expansion opportunities and further acquisition targets in the Baltics and neighbouring countries.

Vet   Ventures   operates   five pet clinics in Vilnius and plans to open and acquire a few more clinics this year. Vet Ventures employs 60 people.

“The number of pet owners is increasing every year but the market of veterinary services in Lithuania and the whole region remains fragmented and lacks high quality services. We are targeting veterinary clinics of various sizes across the region and by investing in clinics, we will seek to act as the majority shareholder,” Ernestas Kazbaras, Head of I Asset Management, explains the further growth plans. An important counterpart paving way to the investment is Liisa Leitzinger, her support and longtime social activity in raising awareness and taking care of homeless animals with her NGO Geri Namai, has been crucial. “Liisa is the godmother of Dr. VET concept and is the first investor to the IAM Petcare Growth Fund,” Kazbaras added.

Kornelijus Čelutka, Partner at BaltCap, says the investment in Vet Ventures together with strong partners serves as a Pan-Baltic platform to facilitate market consolidation and improve access to high quality veterinary care .”We were attracted to invest in Dr. VET because of experienced and well-prepared partners and fast growth in pet care sector. A decade ago, we invested in the healthcare services consolidating Lithuanian market and creating a leading chain. We hope to capitalize on this experience in the vet industry,” Čelutka commented.

Vilius Baskas, General Manager of Dr.VET, encourages the owners of other veterinary clinics to join the chain and develop it together. “The value of chain for clinics comes from more efficient procurement and purchasing, more advanced high-quality equipment single clinics usually cannot afford, and also from centralized administration and general functions, which allows vets to focus entirely on their job and core speciality” says Baskas.

 

Additional information:

Kornelijus Celutka

BaltCap, Partner

Kornelijus.Celutka@baltcap.com

www.baltcap.com

 

BaltCap announces Climate Commitment plan

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To actively contribute to decarbonizing the economy and meeting the EU’s 2050 climate-neutrality agenda, BaltCap announced its Climate Commitment plan and launched a portfolio-wide CO2 measurement. We asked Martin Kõdar and Simonas Gustainis, the Managing Partners at BaltCap, why Climate Commitment is important and what the next related steps are at BaltCap.

What drives BaltCap when establishing its Climate Commitment plan?

Martin: Being the largest private equity in the Baltics and having a presence in the Nordics and Poland gives us a unique position to impact the growth and strategic development of numerous powerful companies in our region and beyond. This also gives us an opportunity to make a difference in a sustainability context.

Simonas: In our view, to make decarbonizing the economy really happen, it must be perceived as both a business opportunity and a responsibility of all the players in the ecosystem.

Martin: For BaltCap, establishing the Climate Commitment and related action plan is a guiding framework when encouraging and steering our portfolio towards net-zero.

What does BaltCap´s Climate Commitment mean?

Simonas: In general, we are of course guided by the EU’s 2050 climate-neutrality agenda and the Paris Agreement and will adapt our actions accordingly.

In more concrete terms, we have chosen a differentiated approach, where each portfolio company and also BaltCap as a fund manager will have individual targets and timeframes for CO2 reduction based on company analysis.

Martin: We plan to develop science-based targets (by SBTi) to reduce greenhouse gas (GHG) emissions and set specific net-zero GHG emission targets after a portfolio analysis in 2022 (against the 2021 baseline).

BaltCap as a fund management company will become carbon neutral in scopes 1 and 2 emissions by 2025.

How to convince a small or medium-sized company to contribute to decarbonization?

Simonas: First of all, committing a company to reducing GHG emissions and addressing climate issues opens up new value creation opportunities. It provides new market opportunities and revenue streams, helps to attract investment and talent, and differentiates us from competitors.

Martin: Customers, supply chain actors, and also current and future employees have increased their expectations of businesses in terms of businesses’ environmental impact. To attract and retain the best talent and serve its customers, businesses need to be part of the climate solution, not the problem. ​

Also, changing regulatory and capital markets will drive the change, meaning that very soon it will be impossible to get a loan at competitive rates if you have no proven commitment to climate neutrality and ESG.

Meet Šarūnas Alekna, Partner at BaltCap

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Congratulations to the new Partner at BaltCap – Šarūnas Alekna. We had a chat with Šarūnas to find out about his professional journey and ask how he sees the development of private equity industry in the coming years.  

You have worked in BaltCap for 11 years, how did you find your way to private equity and BaltCap? What do you enjoy most about working in private equity? 

Before joining BaltCap, I’ve worked in sell-side advisory, advising clients on M&A and capital raising transactions at Evli bank and Suprema. I guess I was attracted to private equity by the prospect of doing deals and taking full responsibility of the entire transaction rather than providing advice on separate steps. Private equity industry was still in early stages in the Baltics and BaltCap was obviously a pioneer in it, but I think no one expected it to develop as rapidly as it did. 

For me, the best thing about private equity is that all the stakeholders including investors, managements and ourselves are fully aligned on one thing – increasing the value of our portfolio companies. In addition to that, we’re able to operate swiftly and efficiently with small teams and fast decision making, concentrating on key issues and opportunities. I think, this has been the reason why private equity has grown into major asset class what it is today.  

At BaltCap you say you „Build business champions“ – what exactly does it mean?  

Like in any team sport, it takes a great team to win championships. Foremost we seek management teams and companies who have the ambition to become champions in their own leagues. But we don’t stop at selecting right teams and industries. Today, to succeed in any sector it takes excellence across all business drivers. At BaltCap, we put special focus on factors like digitization, sales excellence, capital efficiency and ESG, where we draw on experience from more than 100 investments to help companies improve key processes. 

How do you see the PE sector in the next five…ten years?  

I think we will see continued expansion of PE strategy, because the alignment that I mentioned previously ensures attractive returns of the asset class and constant inflow of investor capital. But also because the sector has become much larger, we will see it becoming more similar to public equity with increased transparency, regulation and reporting requirements. This will affect GPs, investors and also portfolio companies. But overall it should be a positive development, making PE more open and accessible to a wider range of investors. 

You have been and currently are the lead in many noteworthy BaltCap investments – Ecoservice, Krekenavos, Workland, to name some. What is your advice to Baltic companies that plan to engage additional capital and are eager to grow? 

There is no general advice, so I would just suggest getting in touch, because one of a few positives of the pandemic has been that it has become especially easy to jump on a video call and discuss the issues at hand.  

What box sets have you been watching during lockdown? 

What’s a box set? I’m more of a fan of larger-format movies, so it’s a pity that pandemic has delayed or cancelled many titles. But recent releases, like Denis Villeneuve’s Dune, has reignited hopes that cinema movie experience will eventually come back. 

Meet Eneken Napa, Partner at BaltCap

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Last week BaltCap management announced the promotion of new Partners.  Congratulations to Eneken Napa, one of the new Partners at BaltCap. We had a chat with Eneken to find out about her professional journey and ask how she sees the development of private equity industry in the coming years.

Eneken, you have worked in BaltCap for almost 10 years, how did you find your way to private equity and BaltCap? What do you enjoy most about working in private equity?

I am a true example of how temporary solutions tend to become permanent. After a 7-year career in a Big4 audit firm and a year away completing my MBA studies I was actually aiming for a CFO role in the food and beverages industry. By coincidence BaltCap was then looking for a temporary placement to fill the role of financial manager. Although it was intended as a one-year assignment, I saw this as an opportunity to get my “foot in the door” and take it from there.

I can truly say I’m excited to get to work each morning.  Working with our diverse stakeholders and portfolio does not allow much routine and I’ve not felt boredom in my work yet as there are constantly some new challenges waiting.

I also enjoy that in BaltCap we have a culture where independent work and taking initiative is valued. And last but not least, I appreciate the people in BaltCap who are fun, smart and inspiring colleagues.

In BaltCap you have been responsible for building different support/back- office functions that have emerged due to a changing regulatory environment. How do you see the future in this realm?

Like it or not, governments are increasingly using policy and legislative tools that address financial markets.  The regulatory requirements are indeed constantly growing and so do the requirements from the investors for more comprehensive and personalized reporting. I’m glad that we have a coherent and well-established team of support and middle office professionals in BaltCap and for the coming years the aim is to continue powering up on suitable software solutions and developing tools and competences to meet these requirements.

It is not a secret that private equity has traditionally been a playground for men. Do you think it is relevant to have more women on board, how would you encourage them?

In BaltCap as well as during Big4 times I have evidenced that in Latvia and Estonia we have a strong representation of female board members. I totally agree that there should be more women in the teams as well as in leadership roles, to complement the skillset, values and group dynamics. Also, numerous studies have indicated that diversity in private equity teams is the key to outperformance.

I personally have been encouraged by male colleagues not to underplay myself and that is the advice I would also give to other women (or, like our colleague said in an interview published in https://www.womeninpevcinbaltics.com: ”Just be bold!”). I tend to think that I have managed to advance my career thanks to love for the job that I do as well as personal traits of proactiveness and grit which is why I often naturally go beyond the tasks assumed of my current role. But a bit of luck also helps every now and then, so I guess I have happened to be in the right place at the right time.

How do you see the PE sector in the next five…ten years? 

Building future scenarios is actually not my cup of tea, as there are too many unknown variables for an auditor-type like me 😊. Still, I believe the sector will continue its growth. Covid-pandemic proved the important role of PE as a value creator in economies, especially in turbulent times. For SMEs the strategic and financial backing of PEs as active owners was critical. And I trust the complexity of the external environment will only increase.

I also believe the sector will become increasingly “public”. If you compare what we knew about private equity companies ten years ago and what we know today, the change has been enormous. Initiatives related to responsible investment, ESG and climate change have altered the PE sector permanently.

What box sets have you been watching during lockdown?

I tend to fall asleep when watching TV, so it doesn’t happen very often. But I do admit getting addicted to Suits series on Netflix. In the past I’ve also enjoyed series on Catherine the Great and Queen Victoria. Learning about history has not been among my passions but these series got me interested in the subject!

BaltCap announces new partners

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BaltCap, a private equity manager operating across the Baltics, Nordics, and Poland, announces the promotion of two long-standing team members Sarunas Alekna and Eneken Napa, to Partner.

Established in 1995, BaltCap has continued to see strong growth and performance in recent years. In 2019, BaltCap expanded its office footprint into Finland, Sweden, and Poland, totalling six international offices. BaltCap also launched its third buyout fund and first VC fund in 2019.

BaltCap has grown the team and promoted from within to support the depth of service provided to its investors.

“Promoting Sarunas Alekna and Eneken Napa to Partner is based on their strong contribution to the recent growth of our business and performance within our funds. Our Partnership now boasts 11 members, with an overall team size of over 35 professionals,” said Martin Kõdar, Managing Partner at BaltCap. “We are committed to our funds’ investors by providing them with deep local teams who source differentially and add value to our portfolio companies and funds. This investment in human capital has borne fruits in the form of returns for our fund LPs,” Kõdar added.

Sarunas Alekna has contributed to the BaltCap buyout funds through numerous successful investments since joining the Vilnius office in 2010. He recently led to solid exits in leading Baltic waste management companies, Ecoservice and Eesti Keskkonnateenused. In addition, he remains involved in several current portfolio companies where he is driving value creation initiatives. “With his entrepreneurial spirit and focus on excellence in sustainable performance, Sarunas has set a great example in carrying our core values forward,” Kõdar commented.

Eneken joined BaltCap’s Tallinn office in 2012, initially as Finance Director and was subsequently promoted to Finance & Risk Director in 2017, and now to Partner. “As we continue to service our investors to deliver optimal risk-adjusted returns, our risk frameworks and back office have had a huge part to play in our development as an investment organization over the past decade. Eneken has led that development with a high degree of professionalism and integrity. We are also delighted that we can continue to expand the diversity of our leadership team, just as we encourage our portfolio companies to expand theirs,” Kõdar explained.

BaltCap has been a signatory of UN Principles for Responsible Investment since 2008.

 

Additional information: 

Riin Savi
Director of Communications and Culture
Phone: +37255662892
E-mail: riin.savi@baltcap.com
www.baltcap.com 

Meet Maris Mäes, the new Procurement Director of CaPS Baltics

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Maris Mäes joined CaPS Baltics, the joint venture of BaltCap and CaPMan, a leading Nordic private asset management and investment company, this summer. In the interview below, Maris introduces herself and sheds light on her plans when further developing the procurement service platform for the BaltCap portfolio.

Welcome, Maris! Please tell us a few words about your background.

Before joining the CaPS team in June, I worked in London for one of the leading management and technology consultancies serving the transport and energy sector. I was in charge of the business development strategy and digital marketing campaign for their brand new, on-demand consulting platform. I have 15 years of experience in the industry and the consulting sector, leading operations and strategy consulting teams, working with global technology and manufacturing companies across Europe, China and the USA.

What is the main value offering of CaPS Baltics? 

CaPS Baltics is a joint venture between BaltCap and CaPMan, a leading Nordic private asset management and investment company.

At its core, CaPS provides centralised procurement service for its portfolio companies in the Baltics, Finland and Sweden.  CaPS enables the portfolio companies to more efficiently manage their non-strategic products and services, delivering savings, increased service levels and extended payment terms. CaPS is an added resource for the procurement team, negotiating with or on behalf of the portfolio companies, constantly identifying new savings opportunities and supporting contract implementation.

Established in 2009, CaPS has a strong track record delivering benefits to its member companies in the Nordics. CaPS Baltics launched in August 2020 to serve 60+ portfolio companies in the Baltics with a combined turnover of 900M€.

In addition to B2B savings, we are also building up an employer benefits scheme – discounts and benefits for all employees under the CaPS umbrella. The first vendor to extend their offer is Radisson Blu, while we continue negotiations in telecom, IT and fuel categories.

What are your plans for the next six months?

CaPS Baltics has a very busy autumn ahead. We are rapidly expanding the range of contracts and employee benefits available for the portfolio companies. Next round of CaPS tenders covers categories such as fuel, electricity, courier services, cleaning and healthcare.

I am looking forward to meeting all the portfolio companies that I have not yet had the chance to consult with, to learn more about their purchasing needs and challenges. CaPS Baltics services must be tailored to their specific needs.  Many thanks to all the BaltCap investment directors for their support and advice on behalf of the portfolio companies so far.

I’m very much looking forward to close and fruitful cooperation.

Warm welcome and best of luck from the BaltCap team!

 

BaltCap received 2021 CSR Index gold level award

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BaltCap was recognized with a Corporate Social Responsibility Certificate and gold level quality label in the Estonian Corporate Social Responsibility (CSR) Index 2021. 

We participated in the CSR Business Index Estonia for 11th consecutive year and received the highest, gold level award for the fifth time. 

The quality labels have been awarded to responsible businesses by the Estonian Responsible Business Forum for 13 years already. On 27 May, 63 companies, public organizations and non-profit associations operating in Estonia received either a bronze, silver, or gold level quality label for following sustainable business practices and leading by example. 

„We are committed to building sustainable businesses and seek positive impact with each investment at BaltCap. The CSR gold level standard confirms we are on the right track, and it gives us motivation to further improve our portfolio-wide sustainability approach,” said Riin Savi, Director of Communications and Culture at BaltCap.  

BaltCap has followed the policies and practices of responsible investment since establishing the first funds in 1995.  Today environmental, social and governance (ESG) factors are fully integrated in our everyday operations and we are proud to have a 10-year track record of reporting our portfolio ESG performance. 

The CSR Index aims at assisting companies to define, evaluate and monitor their economic, social, and environmental impact. It enables companies to receive feedback and compare their results with their peers, thus identifying the future needs for development giving ideas and inspiration.

 

Additional information: 

Riin Savi
Director of Communications and Culture
Phone: +37255662892
E-mail: riin.savi@baltcap.com
www.baltcap.com 

 

BaltCap welcomes new team members

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BaltCap has strengthened its growing team with two new professionals – Investment Associate Kristjan-Mart Piirsalu and Back Office Specialist Helina Aab. With new members on board, BaltCap unites more than 35 investment professionals with various industry background in Tallinn, Riga, Vilnius, Warsaw, Helsinki and Stockholm offices.

Kristjan-Mart Piirsalu joins BaltCap team as an Investment Associate. Kristjan-Mart brings extensive knowledge in M&A and capital raising, asset valuation and financial analysis. He has previously worked in KPMG Baltics Deal Advisory and LHV Asset Management. Kristjan-Mart holds a Bachelor´s degree in Economics and Business Administration from the University of Tartu.

Helina Aab joins BaltCap team as a Back Office Specialist and will support our financial and legal team. Helina brings experience from the vibrant Estonian Startup community and KMPG Baltics, where she worked at various back office positions. Helina holds a Bachelor´s degree in Business Administration from Estonian Business School.

Oliver Kullman, partner at BaltCap listed among Real Deals’ Future 40 Investment Leaders

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Published annually and selected by a judging panel of industry experts, the Real Deals Future 40 list highlights the top 40 mid-market private equity investment professionals who have achieved commendable exits in 2020.

Oliver Kullman, partner at BaltCap was recognised for his lead role in auto24 and Kuldne Börs online portals investment. As lead partner, Oliver drove each stage of the investment from sourcing in 2016 until successful exit in 2019/20.

According to Real Deals, Oliver Kullman has proven his ability to source and execute a range of deals. „Most notably, Kullman took a lead role in one of BaltCap’s most successful investments to date: Sanoma Baltics, the Estonian operator of the auto24 and Kuldne Börs online classifieds portals. Kullman was then able to execute several add-ons and supported the management team in launching a number of new services.” Real Deals forwards that BaltCap exit from auto24 to Baltic Classifieds Group in 2019/20 generated significant international interest which testaments Kullman’s value creation strategy.

Oliver joined BaltCap in 2007 and has led numerous successful investments in the buyout team. His involvement in current portfolio includes Baltic Ticket Holdings and FCR Media. Oliver was involved with Qvalitas and Unimed, auto24, Quattromed and eKool prior to their exits.

Before joining BaltCap Oliver worked in a London-based strategy consultancy on private equity due diligence assignments. Oliver has graduated from Stockholm School of Economics with a Master’s degree in Finance and has an EVCA Certificate in Institutional Private Equity Investing (CIPEI) from Oxford Saïd Business School.

More information on Real Deals’ Future 40 Investment Leaders and read the full list can be found here.

Additional information:

Riin Savi
Head of Communications and Culture
Riin.savi@baltcap.com
+372 55662892

Hackathon co-organised by BaltCap awards startups focusing on drainage system and cleaning waterbodies

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Clean Water Hackathon organised by BaltCap, innovation consultancy Katalista Ventures, and backed by Nefco, mobilised seven pan-Baltic expert teams to find actionable solutions for improving the quality of the Baltic waters. The winners of the hackathon are two startups – EkoDrena from Lithuania and PurOceans from Latvia.

During the hack, EkoDrena provided a solution for mitigating the negative environmental effects of farming. Farming has become the main polluter of the surface waters of the Baltic Sea region due to washed out fertilizers that greatly increases eutrophication processes. EkoDrena proposed an adjustable underground drainage system regulating the water retention in the soil and keeping the critical value in the fields with the help of drainage. The system also enables to slow down the eutrophication processes in the surface of the water. The adjustable system developed by EkoDrena allows farmers to regulate the humidity of the soil and thereby align it to weather conditions.

The second winner, PurOceans, developed a unique technology to clean up the waterbody’s floor sediments, micro-plastic, chemicals and other pollution elements. PurOcean provided a non-intrusive, chemical and excavation free solution allowing to clean waterbody’s floor without causing damage to flora and fauna.  Their portable technology pumps high-pressure air bubbles into the waterbody’s floor, forcing pollutant particles to rise to the surface where they are safely collected and removed. With the novel technology, 98% of pollutants can be removed and enhanced from the seabed while preserving the existing ecosystem at the most cost and time effective way.

Clean Water Hackathon was organised to draw attention to the water quality issues in the Baltics and find actionable and financially valid solutions for mitigating the problem. The participant teams were preselected teams solving environmental challenges on daily basis. The hackathon provided the teams a different setting in terms of time span and tools for working – the teams were mentored by numerous experts from marketing, law, environmental protection, business, information technology, and other fields.

Clean Water Hackathon lasted for a record-long 12 days, including 85 team meetings with mentors and partners. The event attracted a great number of international organisations from all three Baltic countries, Spain, Sweden, Denmark, and the UK. Organisations included such key market players in the water ecosystem like the Ministries of the Environment in Lithuania, Latvia, and Estonia; Environmental Investments Centre in Estonia; Race for the Baltic Accelerator; KPMG; Cobalt law firm; Black Unicorn PR and many others.

Other participants:

Funguys (LV) – developing and optimizing the biological treatment bio fungi span for treating the wastewater from pharmaceutical substances.

Litmus (LT) – developing an app for engaging citizens in improving water monitoring and raising awareness of water quality.

AzureBlue (EE+LT) – creating a platform that will help to get transparent, available information on water pollution using satellite data.

Time to change (LV) – developing a framework for various beneficiaries to apply a decision-making tree to make more eco-friendly events and mitigate the negative impact.

Biovala (LT) – creating artificial floating islands helping to decrease the levels of nitrogen and phosphorus in our waters.

BaltCap received 2020 CSR Index gold level award

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BaltCap was recognized with a Corporate Social Responsibility Certificate and gold level quality label in the Estonian Corporate Social Responsibility (CSR) Index 2020.

We participated in the CSR Business Index Estonia for 10th consecutive year and received the highest, gold level award for the fourth time.

The quality labels have been awarded to responsible businesses by the Estonian Responsible Business Forum for 12 years already. On 21 May, 76 companies, public organizations and non-profit associations operating in Estonia received either a bronze, silver or gold level quality label for following fair business practices and setting a good example.

It is the fourth time for BaltCap to receive the highest, gold level quality label showing our continuing contribution to further develop CSR matters and make it a top priority also among our portfolio companies. We value sustainable growth and contribute strategically to the development of the social and natural environment.

BaltCap highly values the principles of corporate social responsibility and strives to be a role model in the Baltic business community. We have followed the policies and practices of responsible investment since establishing our first funds and we acknowledge the growing importance of environmental, social and corporate governance in today’s business environment.

The CSR Index aims at assisting companies to define, evaluate and monitor their economic, social and environmental impact. It enables companies to receive feedback and compare their results with their peers, thus identifying the future needs for development giving ideas and inspiration.

 

Additional information:

Martin Kõdar
Managing Partner
Phone: +3726650280
E-mail: martin.kodar@baltcap.com
www.baltcap.com

BaltCap and Labochema mobilised medical equipment for the Baltics!

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More positive news!

BaltCap Infrastructure Fund (BInF) portfolio companies with partners and Labochema supplied 50,000 respirators, 75,000 3-ply masks, over 100,000 gloves, 5,000 rapid tests and other personal protection equipment to the Baltic countries. The final shipment reached the destination today!

In Estonia, recipients of the donation are national Covid-19 treatment hospital North Estonia Medical Centre and Kuressaare Hospital in Saaremaa. Saaremaa is an island in Estonia most severely hit by the Covid-19 crisis where self-protection measures have been lacking. In Latvia, donations addressed 70 municipalities and their social workers, municipal police and elderly homes. In Lithuania, the personal protection measures were supplied to numerous Vilnius healthcare institutions.

BInF portfolio companies and other infrastructure companies in the Baltics acted as market makers to Labochema and helped to mobilise EUR 338,000 worth of supplies by donating EUR 153,000.

“We saw access to quality personal protection equipment not as a funding problem, but rather a supply chain challenge that was successfully solved by our portfolio company Labochema,” Sarunas Stepukonis, partner at BaltCap Infrastructure Fund explained their engagement.

Labochema is the leading provider of laboratory supplies in the Baltics. The company offers chemical reagents, consumables, laboratory equipment, laboratory furniture and provides laboratory installation and maintenance services.

See more: https://www.labochema.com/

BaltCap portfolio company Ygle engages in ad-hoc COVID-19 hospital planning for Vilnius

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Ygle in partnership with Do Architects and 2L Architects carried out temporary COVID-19 hospital and quarantine premises planning. The ad-hoc plan was prepared to Vilnius municipality in case major COVID-19 outbreak pushed the Lithuanian hospitals out of capacity.

The project was coordinated by BaltCap to contribute to mitigating the negative effects of the COVID-19 crisis. BaltCap exploited its extensive network of partners and helped to connect relevant public and private sector counterparts for the ad-hoc hospital planning in Vilnius.

Ygle, Do Architects and 2L Architects designed a detailed installation guide to prepare schools and other public facilities (e.g. sports and showroom venues) in Vilnius for conversion into emergency hospitals for COVID-19 patients. Ygle also secured a supply chain for beds, oxygen and mobile sanitation units; for detailed plans see https://www.school2hospital.lt/.

Sarunas Stepukonis, partner at BaltCap Infrastructure Fund commented that drawing the plan identified three challenges in a worst-case scenario: lack of sanitation units and medical beds on a short notice, providing oxygen to beds, and modular partition of the space. “The advance supply chain planning enables to build a 2000-bed temporary hospital in less than two weeks,” he said.

Ygle Pastatu Valdymas is a Lithuanian SME providing technical building maintenance and administration services for engineering systems. Their work during the project based on pro bono. Ygle is a portfolio company of BaltCap Lithuania SME Fund.

BaltCap welcomes three new team members

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BaltCap has strengthened its experienced investment team with three new professionals – Investment Director Juris Parups, Legal and Compliance Manager Maido Lillemets, and Director of Communications and Culture Riin Savi. With new members on board, BaltCap unites 32 professionals with various industry background in Tallinn, Riga, Vilnius, Warsaw, Helsinki and Stockholm offices.

Juris will add to the current investment team with his previous experience as a Regional CEO and Country Manager at Mogo. Prior to that, Juris was a consultant in London office of The Boston Consulting Group focusing on strategy, organizational change and effectiveness projects. Juris holds an MBA from IMD Business School.

Maido brings strong experience in the field of regulatory compliance and collective asset management law. He joins BaltCap from one of the largest pension fund managers in Estonia, LHV Asset Management. In BaltCap Maido is responsible for managing the compliance function and advising the investment team on various legal questions. Maido holds a Master’s Degree in Law from the University of Tartu.

Riin joins BaltCap with extensive experience in project coordination and process management. She has previously worked as the manager of Estonian Traders Association and coordinated numerous international R&D projects in TalTech and University of Tartu. In BaltCap Riin is responsible for coordinating communication, HR and ESG initiatives. Riin holds a PhD in Public administration from TalTech.

BaltCap is proud to present the 2018 ESG report

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Responsible investment is a vigorously growing trend globally, creating value for investors and the society in general. We have witnessed steady progress in the environmental, social and governance (“ESG”) performance of our portfolio companies and are happy to share the results by presenting our 8th annual ESG report.

Continuing the positive developments of previous year, our portfolio companies posted strong results also in 2018 – the aggregate revenues reached €649 million, EBITDA €67 million and the total number of employees 8000.

The results mirror organic growth throughout the entire range of observed ESG aspects. The understanding of the relevance, risk and opportunities of sustainable and responsible business practices is maturing increasingly.

„The success of the businesses depend on the ability to align their strategies with ESG issues and we support our portfolio companies in becoming stronger and more competitive in that sense. Yet we expect our portfolio companies to follow the highest legal and ethical standards,“ said Martin Kõdar, Managing Partner of BaltCap.

The overall BaltCap ESG Index (the average result of portfolio companies) improved slightly over the previous year, reaching 52%. Although we updated both the questionnaire and the methodology, a parallel can be drawn between the results for 2018 and previous years, mostly explained by the following three observations seen behind the numbers:

 

  • We witnessed steady progress in almost all observed categories, aspects and single questions
  • Portfolio companies with a greater impact perform better
  • Companies improved their ESG performance under BaltCap ownership

 

Please see our full 2018 ESG report available here

BaltCap has been one of the forerunners in responsible investments in the Baltics for years. 2018 was the ninth consecutive year for us to participate in the Estonian Responsible Business Index. As in previous years, BaltCap received a gold-level Quality Label. We are constantly striving to improve our approach to contributing and being part of a sustainable future.

 

Additional information:

 

Martin Kõdar
Managing Partner
martin.kodar@baltcap.com
Phone: +372 665 0280
www.baltcap.com

BaltCap received 2019 CSR Index gold level award

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BaltCap was recognized with a Corporate Social Responsibility Certificate and gold level quality label at the Estonian Corporate Responsibility Index 2019 gala.
We participated in the CSR Index Estonia for 9th consecutive year and received the highest, gold level award for the third year in a row.

The quality labels have been given to several hundred responsible businesses for 11 years already. On a gala dinner held on May 22, 78 companies operating in Estonia received either a bronze, silver or gold level quality label for following fair business practices and setting a good example.

It is the third time for BaltCap to receive the highest, gold level quality label showing our continuing contribution to further develop CSR matters and make it a top priority also among our portfolio companies. We value sustainable growth and contribute strategically to the development of the social and natural environment.

BaltCap highly appreciates the concept of corporate social responsibility and hopes to be a role model for many other firms. We have followed the policies and practices of responsible investment since the first funds and believe that environmental, social and corporate governance issues play an increasingly important role in today’s business environment.

Every year we also issue an Environmental, Social and Governance report of our own, this document is based on questionnaires conducted among our portfolio companies. By this we seek to further improve general understanding in ESG matters and identify actions our companies can take to strengthen not only businesses but also reputation and performance.

The CSR Index aims at assisting companies to define, evaluate and monitor their economic, social and environmental impact. It enables companies to receive feedback and compare their results with their peers, thus identifying the future needs for development giving ideas and inspiration.

The full results of the 2019 Estonian Sustainable Business Index will be available here: https://indeks.csr.ee/en/


Additional information:

Martin Kõdar
Managing Partner
Phone: +3726650280
E-mail: martin.kodar@baltcap.com
www.baltcap.com

Why being ruthless about reputation matters

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“Lose money and I can forgive you, but lose even a shred of reputation and I will be ruthless.” Those were
the words of Warren Buffett when he stepped in as interim chairman at Salomon Brothers, the U.S.
investment bank that was hit by a trading scandal in 1991 that nearly sank the firm and tarnished Wall
Street’s reputation.

Financial services operate primarily on integrity and trust, so any loss of reputation can have a hugely detrimental
impact on individual companies and the industry at large. It is no different for private equity than any other part
of the financial sector, and it’s the same now as it was almost three decades ago. Indeed, reputational risks today
stem from a huge range of sources – not only financial misconduct, but also environmental damage, sexual
harassment or simply flagrant disregard for transparency.

Acting with integrity is at the heart of Invest Europe’s Code of Conduct, and it’s a fundamental building block of
trust between fund managers and investors – as well as portfolio companies, policymakers and the general public.
Of course, private equity has to operate within the confines of regulation, such as the Alternative Investment Fund
Managers Directive, and detailed agreements between limited partners and general partners. But no matter how
strict the rules, trust – based on a track record of clarity, reliability, honesty and a high standard of both personal
and professional behaviour – is essential.
Like many investors across Europe, Blue Sky Group – a Dutch pension fund administrator, managing €22 billion
for around 100,000 scheme participants – aims to maintain the highest standards of integrity before its clients, and
demands that all employees and external managers abide by the same ethos. By the same token, BaltCap, a private
equity firm focused on the Baltic States, has its own Code of Responsible Behaviour, which it expects all its
portfolio companies to adhere to.

Being on the same page is essential. Private equity portfolio companies employ some eight million people across
Europe and often play significant roles in the local and international economy. Any misconduct at a portfolio
company will have a negative impact on the general partner, as well as the limited partner, who is trustee for a
large number of savers and therefore accountable for everything decision in their names.

As individual investors and managers we can make our own rules. We can incorporate as much as possible into
legal contracts and monitor those agreements closely. However, we can’t govern or influence the whole industry
alone. That’s why it is essential that organizations like Invest Europe stand up for the promotion of integrity and
transparency within private equity, and champion private investment in general. Collective action among Invest
Europe members is crucial for the development of best practice, which in turn is a very powerful tool for fostering
trust.

Few would dispute that private equity’s reputation has been built on making money for investors, thanks in large
part to smart investment and operational skills. By focusing on integrity, fund managers can ensure that
reputation is beyond reproach.

The blog is published on Invest Europe website: Blog post

The Board of Lithuanian Private Equity and Venture Capital Association elected Sarunas Alekna as their new Chairman

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The board of Lithuanian Private Equity and Venture Capital Association (LT VCA) elected Sarunas Alekna as their new Chairman. Sarunas has been working as an Investment Director in BaltCap since 2010.

The new board was elected at the LT VCA general meeting on March 29 and the members will serve for two years.

Lithuanian Venture Capital Association is the representative body of Lithuanian Venture Capital industry. Established in 2009, it has grown to 31 active members covering different types of venture capital business activities: 10 full members and 21 associate members comprise fund management companies, consulting firms, lawyers, public institutions who support and advise investors and entrepreneurs in the structuring and management of their partnerships.

Sarunas also serves as the Chairman of the Supervisory Board of BaltCap’s portfolio companies Kelprojektas, FCR Media, Ecoservice and BPT Real Estate. He’s also a graduate of London Business School and Baltic Institute of Corporate Governance.

“Lithuanian private equity and venture capital ecosystem, while at an early development stage, is already demonstrating first achievements – the amount of private equity and venture capital investments increases from year to year, helping small and medium companies grow at home and abroad. It’s especially important that over the last years we’ve seen an increasing number of transactions whereby local funds exit portfolio companies, delivering positive returns for fund investors. The new board of LT VCA will strive to support sustainable growth of the ecosystem, while maintaining a dialogue with private and public sector partners,” Sarunas Alekna said.

Apart from services on behalf of members (monitoring of legal, regulatory and tax issues, research studies and statistics, training, development and communication, etc.), LT VCA serves as a central platform for representation and promotion of the VC business to institutional investors, opinion leaders, and public policy makers. The association helps to improve financing of the economy, for small businesses in particular, as well as promote economic growth and entrepreneurial spirit. LT VCA is open to cooperation with venture capital funds, asset management funds, investment funds, business angels, legal offices, financial consultants and all other players involved in the market of direct investments.

 

Additional information:

Sarunas Alekna
Investment Director, BaltCap

sarunas.alekna@baltcap.com

Phone: +370 6868 9242

BaltCap won the Venture Capital Firm of the Year award

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On March 22, CEE M&A Director Magazine hosted the 2nd annual CEE Mergers & Acquisitions (M&A) Awards ceremony at the Intercontinental Hotel in Warsaw.

We are proud to announce that among the finalists across 15 categories, BaltCap gained recognition by winning the Venture Capital Firm of the Year Award.

In addition to the traditional M&A awards, a host of prizes were awarded to a variety of M&A consultancy and services companies for their professionalism and excellence in the sector. For example, this year the CEE M&A Awards featured several new law firm categories, recognizing the professionalism and expertise of international law practices.

At a glance around 150 senior decision makers from the M&A sector were in attendance.

Primarily the awards recognized companies and individuals who had demonstrated the best overall performance during the past year as well as the outstanding efforts and achievements of all those involved in identifying, coordinating and completing the important deals, which have produced consistent results, and the potential to change the fate of businesses and industries throughout the region.

 

Additional information:

http://www.ceemaawards.com/

ESTVCA elected Kristjan Kalda as a new Chairman

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Estonian Private Equity & Venture Capital Association (ESTVCA) has elected BaltCap partner Kristjan Kalda as a new Chairman. The new Management Board was elected for the next 2 years.

 

Kristjan Kalda also serves as the Chairman of the Supervisory Board of BaltCap portfolio companies TREV2 Group, Fitek and Magnetic MRO. The latter was recently named Estonian Company of the Year and Estonian Exporter of the Year.

 

ESTVCA is the representative body of Estonian Private Equity & Venture Capital Industry that was established in 2009. In addition to the new chairman,  the other ESTVCA management board members are Kalmer Kikas (BPM Capital), Margus Uudam (Karma Ventures), Heidi Kakko (BaltCap Growth Fund), Kaido Veske (Livonia Partners), Martin Hendre (Tera Ventures), Sille Pettai (SmartCap), Antti Perli (Ellex Raidla), Kadri Kallas (TGS Baltic), Mihkel Kolk (Estonian Association of Fund Managers) and  Kristel Raidla-Talur (COBALT).

Kristjan Kalda says that ESTVCA members, owning companies and employing people in different countries, have a very good understanding of Estonian competitive advantage.

“We are well positioned to help improve the investment and entrepreneurship climate in Estonia and increase the competitive advantage by sharing our experiences and participating in developing legal environment,” Kalda added.

The goal of ESTVCA is to develop a sustainable and attractive ecosystem for the benefit of entrepreneurs, fund managers, institutional investors and to increase the output of innovative and high growth potential companies in Estonian economy. ESTVCA has 15 members and 23 Associate Members. Combined assets under management of Private Equity & Venture Capital houses are €880m and the goal is to reach €1bn by 2020.

 

Members of ESTVCA are Ambient Sound Investments, BaltCap, BPM Capital, Eften Capital, European Investment Fund, Invesco Finance, Karma Ventures, KredEx, LHV Asset Management, Livonia Partners, SmartCap, Swedbank Investment Funds, Tera Ventures, United Partners and UP Invest.

 

More information:

Kristiina Koort

Managing Director
+372 5750 2049
kristiina@estvca.ee
www.estvca.ee

Estonia
 Skyon, Maakri 30, 24th floor / Tallinn 10145
Phone: +372 665 0280 / Fax: +372 665 0281

Latvia
Jaunmoku 34 / Riga LV-1046
Phone: +371 6721 4225

Lithuania
J.Jasinskio 16b / Vilnius LT-03163
Phone: +370 5 254 6713

Poland
WeWork, Krucza 50 / Warsaw 00-025