One of the most experienced venture capital fund managers in the Baltic States, ZGI Capital, has attracted private investments of 10 mln euros to the newly founded capital growth fund ZGI-4. At present, it is the largest private investment raising in Latvia for a state co-financed capital growth fund.
The largest amount, or 7.5 mln euros, was invested in the ZGI-4 fund by Swedbank Ieguldījumu Pārvaldes Sabiedrība AS, which will increase its contribution to 11 mln euros as other investors are involved. It is planned that the new fund will invest both in the traditional industries of the Baltic States, and in the so-called new sectors of the economy, such as fintech companies.
The total amount of the new growth fund ZGI-4 will be 25 mln euros, of which 15 mln euros will be financed by Development Finance Institution ALTUM from the resources of the European Regional Development Fund (ERDF), and 10 mln euros or 40% of the total fund will be private sector investments, from of which 7.5 mln euros are invested by Swedbank Ieguldījumu Pārvaldes Sabiedrība, and 2.5 mln euros by the Central Europe insurer Balcia Insurance SE founded in Latvia and other private investors.
Upon completion of attracting private capital, the fund manager ZGI Capital will be able to start work on the first investments. The volume of investments into one enterprise will amount to 3.75 mln euros. 75% of investments are planned for Latvian companies, and for the diversification of the portfolio 25% of investments can be made in companies of other countries of the European Union. ZGI Capital has extensive experience in investments in metal processing, woodworking, logistics, information technology, engineering, export of services, etc.
The manager of alternative investment funds ZGI Capital, four years in a row awarded with the annual award of the Latvian Association of Private and Venture Funds, was selected as the growth venture capital manager within the ALTUM procurement process at the end of 2017.
Juris Vaskāns, Member of the Board of ALTUM: “Attracting private investments of 10 mln EUR to a venture capital fund financed by ALTUM is a very important event for the whole venture capital industry. This, of course, is an indicator of trust and a positive signal to other private investors who are considering investment opportunities in Latvia. We are especially pleased that the largest investor in our venture capital fund is Swedbank Ieguldījumu Pārvaldes Sabiedrība, placing pension fund plans in alternative investment funds, which is already widely practiced thoughout the world. The synergy between ALTUM, Swedbank Ieguldījumu Pārvaldes Sabiedrba and other private investors in the ZGI-4 fund will provide an opportunity for the growth and development of companies with high growth potential, while traditional financiers refrain from investing in them due to high risks.”
Pēteris Stepiņš, CEO, Swedbank Ieguldījumu Pārvaldes Sabiedrība AS: “We have successfully completed our painstaking work on choosing a fund that lasted more than half a year, with countless hours spent on the evaluation of the fund, in-depth study, interviews and discussions with the teams of ZGI Capital and ALTUM. These investments are an excellent addition to our local investment portfolio in Latvia and the Baltic States, which is an integral part of our investment strategy. We believe that long-term local investment can beat impersonal global investment. Therefore, we expect that ZGI Capital’s active role in the selection and provision of financing for innovative companies will not only give a good return for our customers, but will also be a healthy incentive for the development of venture capital and innovative enterprise ecosystems.”
Normunds Igolnieks, leading partner of ZGI Capital: “First of all, we would like to thank for the trust our investors – ALTUM, the largest manager of the Swedbank pension fund, Central Europe insurer Balcia Insurance SE founded in Latvia and other private investors. We will use the gained experience of managing the fund of the fourth generation to get additional capital from investors and support local entrepreneurs, providing the necessary capital for future growth. We will invest in small and medium-sized enterprises that have entrenched in the domestic market and enter new export markets, mastering new innovative products or technologies, building up capacities, developing new lines of business, increasing profitability or automating the corporate processes. Currently, the first round of attracting fund investors is taking place. The fund starts its work, and our goal is to attract additional private investors within the next 12-24 months and increase the fund’s assets to 35 mln euros.”