The Mundus asset management company has launched a new Mundus Mezzanine I closed-end mutual fund intended for informed investors. This mezzanine fund began operating on 4 February, after the Bank of Lithuania approved its rules.
The planned size of the fund is EUR 15-30 million. It will operate for a planned 5 years with a possible 2-year extension, and targets a net return of 10-12 per cent. The minimum investment in the fund is EUR 125 000. An investment period of up to 3 years is foreseen, to begin once EUR 10 million euros is raised from investors.
“We seek to participate actively in the private debt market in the Baltics and we’re introducing a new product that will provide an investment option for those who want to put money in unused financial leverage opportunities in the region,” said Andrej Cyba, the chief business development officer at INVL Asset Management and a member of the board at Mundus.
These investments, he said, have potential for several reasons, starting with historically high manufacturing capacity utilisation in the region, which calls for new investments,and ending with the need for financing to ensure business growth at home and in new markets.
A holding period of 2 to 5 years is foreseen for the fund’s investments in businesses in the Baltic countries. When investing, the Mundus Mezzanine I fund will focus on business growth and acquisition deals as well as the development of new products. The indicative size of an investment is EUR 2-5 million.
“We see in financial leverage unused Baltic business potential that provides opportunities not only for growth, but also for realizing created value. For our part, drawing on Mundus’s experience in private debt investment transactions, we’ll strive to give companies a chance to grow by putting the fund’s capital to work. We’ll also seek to provide financial backing for buyout deals that could serve as a qualitative push for improving a business’s management or pursuing synergies. Return on investments tied to business success will align the interests of the fund and the companies that are using its money,” said Audrius Mozūras, a partner at Mundus.
He said mezzanine-type financing is a flexible form of business credit that also has equity traits and offers possibilities for matching the parameters of an investment with business needs. Moreover, it allows a business to strengthen its equity base in line with the requirements of creditors such as banks, without diluting shareholders’ control of the business, which in exchange lets fund investors aspire to a higher return, and creditors’ capital protection measures are also maintained.
Mundus also operates the Mundus Bridge Finance fund, an open-ended fund for informed investors which seeks a long-term stable return by investing in private debt securities of companies in the fast growing alternative finance sector. From its inception in May 2015 through the end of January 2019, the fund conducted six investment transactions and earned a return of 38 per cent for investors. As of the end of January 2019, the fund’s assets under management exceeded EUR 19.3 million.
INVL Asset Management, one of the leading asset management companies in Lithuania, has owned a controlling stake in Mundussince February 2018.