INVL Asset Management, one of Lithuania’s leading asset management companies, launched a new closed-end mutual fund intended for professional investors: the INVL Baltic Sea Growth Fund. It began operations on 26 June after the Bank of Lithuania gave permission to distribute units of the fund.
The new INVL Baltic Sea Growth Fund will seek to invest in medium-size companies with an attractive risk-return ratio, providing them with capital for further growth. The fund will focus on acquiring controlling or significant minority stakes and will take an active role in the management of target companies, aiming to significantly increase their value over the long term.
The fund will seek to form a diversified portfolio of Baltic Sea region companies and will focus on growth capital, buyout, and “buy and build” investments. The fund’s target size after the distribution of its investment units is EUR 200 million and the maximum size is EUR 300 million.
“We believe this fund is an ideal choice for those investing in the Baltic region. Since 1991, Invalda INVL’s team has built up immense experience in acquiring, reorganizing and growing leading companies in this region,” said Darius Šulnis, the president of Invalda INVL and chairman of the board of INVL Asset Management. He said the historical internal rate of return (IRR) on transactions that Invalda INVL has conducted in line with the new fund’s strategy was 27 per cent.
The fund will make investments of EUR 10 million to EUR 30 million in mature companies that can compete on global markets and have big potential for growth in value, he said. The focus will be on transactions bigger than those that private equity players in the Baltic countries undertake, but smaller than those that interest the largest international private equity and strategic investors.
“Negotiations are currently underway on the acquisition of companies that meet the criteria, so we expect significant investments already this year. We’re also meticulously analysing the market looking for promising businesses that can expand or need strategic changes,” Darius Šulnis said.
The fund aims to attract local and international investors who believe in the future of this region’s promising companies. “Our hope is that it will be the biggest private equity fund in the Baltic countries and will contribute to the region’s growth and development,” Darius Šulnis said.
The managers of the INVL BalticSea Growth Fund will seek to complete 3-5 investments within the first two years of the investment period, and later will focus on expansion. The total portfolio may comprise 8-12 investments. The planned life of the fund is 10 years from the initial closing.
Decisions on which companies the fund invests in will be made by an investment committee. At the start of the fund’s operations, it will be composed of the founding partners. It is seen as one of the strongest private equity teams in the Baltics, with solid experience. Most of its members have been working together for more than a decade. They include: Alvydas Banys, Darius Šulnis, Ashwin Roy (a former partner at the U.S. venture capital firm CVCI who in Baltic countries carried out investments in Sanitas, Iki, and Tallink), Deimantė Korsakaitė, Vidas Venckus, Nerijus Drobavičius, and Vytautas Plunksnis. The team’s combined experience includes EUR 500 million invested and EUR 1.2 billion returned to investors.
“We believe in what we do and want to maximally align investors’ and asset managers’ interests, which is why Invalda INVL and all the members of the team will invest amounts that are significant to them in the fund – altogether EUR 20 million,” Darius Šulnis said.
The exact amount of money to be invested in the fund by Invalda INVL will clear after the signing of binding agreements, regarding which a separate announcement will be made. Funds may be called upon throughout the investment period – during five years from the end of the initial fund-unit distribution phase.
The Bank of Lithuania issued a licence to INVL Asset Management to conduct activities under the Law on Management Companies of Collective Investment Undertakings Intended for Professional Investors in October 2017. INVL Asset Management is part of the Invalda INVL group, whose companies manage pension and mutual funds, alternative investments, private equity assets, individual portfolios and other financial instruments. More than 190 000 clients in Lithuania and Latvia as well as international investors have entrusted them with managing over EUR 600 million of assets.