EIF Pledges €20 Million to New Private Credit Fund Supporting Baltic SMEs and Sustainable Growth

EIF Pledges €20 Million to New Private Credit Fund Supporting Baltic SMEs and Sustainable Growth

(IN BRIEF) The European Investment Fund (EIF) has committed €20 million to the SG Capital Baltic Private Credit Fund, a new initiative managed by Latvia-based SG Capital Partners AIFP. The fund aims to raise €100 million to support small and medium-sized enterprises (SMEs) and mid-sized companies in the Baltics, focusing on senior loans to businesses in Estonia, Latvia, and Lithuania. This initiative will provide financing to businesses that struggle to secure traditional bank loans, with a special focus on sustainable investments. The fund will allocate 15% of its capital to projects meeting climate action and environmental sustainability criteria. The initiative, supported by the InvestEU programme, is expected to close its first round of funding in April 2025.

(PRESS RELEASE) LUXEMBOURG/RIGA, 13-Jan-2024 — /EuropaWire/ — The European Investment Fund (EIF) has pledged €20 million as an anchor investment in the SG Capital Baltic Private Credit Fund, a new initiative led by Latvia-based SG Capital Partners AIFP. This fund aims to provide essential financing to small and medium-sized enterprises (SMEs) and mid-sized companies in the Baltic States, particularly Estonia, Latvia, and Lithuania. EIF’s commitment to this fund is a key step in bolstering financial support for businesses that often struggle to secure sufficient lending from traditional banks.

Managed by SG Capital, a first-time team dedicated to this venture, the fund’s goal is to raise €100 million in total capital from a variety of institutional investors. This funding will focus on offering senior loans to SMEs and small mid-caps in the region, helping them address key financial needs such as working capital, acquisitions, and capital expenditure.

Marjut Falkstedt, the Chief Executive of EIF, highlighted the importance of this initiative, stating that it will play a crucial role in filling the financing gap for small businesses in the Baltics, thereby fostering innovation and economic growth. “Our support is not just about bridging a funding gap,” Falkstedt noted, “but also reflects our confidence in the potential of the Baltic region and the strength of SG Capital’s management team.”

The SG Capital Baltic Private Credit Fund will offer flexible financing solutions, including senior loans and bonds, designed to cater to the specific needs of businesses in the region. As an Article 8 fund under the Sustainable Finance Disclosure Regulation (SFDR), it will allocate 15% of its investments to projects that meet climate action and environmental sustainability criteria.

Set to reach its first closing in April 2025, the fund is positioned to provide a valuable alternative to traditional bank financing, which is often unavailable for smaller companies in the Baltics.

Harijs Švarcs, Founding Partner of SG Capital Partners AIFP, emphasized the firm’s commitment to supporting sustainable investments. “With EIF’s backing, we’re expanding our ability to offer private credit solutions that empower Baltic businesses to grow sustainably and profitably,” Švarcs said.

Arvīds Kostomārovs, Head of the SG Capital Baltic Private Credit Fund, pointed out that private credit offers significant advantages for businesses in the Baltics. Known for its flexibility, speed, and ability to avoid equity dilution, private credit is an increasingly popular financing option in Europe and the U.S. “For companies making long-term investments or acquisitions, private credit offers a viable alternative when traditional bank loans are not an option,” Kostomārovs added.

This initiative is part of a broader effort supported by the InvestEU programme, further underscoring the EU’s commitment to fostering financial inclusion and regional economic development.

Background information

About the EIF:

The European Investment Fund is part of the European Investment Bank Group. Its central mission is to support Europe’s small and medium-sized enterprises (SMEs) by helping them access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that specifically target this market segment. In this role, the EIF furthers key EU policy objectives such as competitiveness and growth, innovation and digitalisation, social impact, skills and human capital, climate action and environmental sustainability, and more.

About InvestEU programme:

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the European Union’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity and thus mobilise at least €372 billion in additional investment.

About SG Capital Partners:

SG Capital is dedicated to fostering growth and building long-term value in the Baltic region through strategic and responsible investments. As one of the first investment firms in the Baltics with a commitment to ESG principles, SG Capital focuses on real estate, forestry, and growth capital — supporting businesses and initiatives that drive regional development and are environment-friendly. Our team actively manages each portfolio, aligning profitable growth with sustainable practices that benefit communities and the environment alike. SG Capital has €200 million gross assets under management among two strategies, investing for 9 institutional investors over last 10 years.

Media Contacts:

EIB Group:
Kristiina Randmaa
M. +352 4379 72894
e-mail:  k.randmaa@ext.eib.org
Website: www.eif.org — press@eib.org

SG Capital:
Gunta Cekule
M. +371 2 9470754
e-mail: gunta.cekule@sgcapital.lv
Website: www.sgcapital.lv

SOURCE: European Investment Fund