During the recent Baltic M&A and Private Equity Forum 2012 held on 18 October in Tallinn, the main message from market players was that the Baltics is a market with great potential and they would be ready to invest. However, while many opportunities are available for local investors, often the bottleneck for international investors is not having sufficiently large targets, bbn.ee reports.
One of the keynote speakers at the Baltic M&A and Private Equity Forum 2012 was Graham Cope from the European Investment Fund (EIF), who introduced the Baltic Innovation Fund, where each Baltic State has agreed to contribute EUR 20 million and the EIF EUR 40 million. Together with funds from private investors, the Baltic Innovation Fund will fuel the Baltic private equity market with at least EUR 200 million. “The EIF has a dual objective to develop the local market, especially for local pension funds, while also balancing it with positive returns to investors,” noted Graham Cope. “The Baltic Innovation Fund is a big step forward to becoming a mature market and we fought hard to get it in the Baltics. I did not know that there has been no real cooperation between the Baltics in signed form. We were quite lucky and I think the logic, need and structure of the fund overcame the obstacles.” Graham Cope concluded that: “The doors are open from today for proposals, we expect a minimum of 50% from private investors, but are impressed if their share is more than that!”
Though the Mergermarket representative Thomas Williams started the day with quite gloomy insights on the current level of global M&A, presentations and panel discussions during the rest of the day shed more positive light on the market situation. “Company owners of 15 years are coming to the market. Much more private equity money is coming to the market, like the Baltic Innovation Fund. Also there’s a lot of activity among high-net-worth individuals, they are looking for growth companies to make them boom,” commented Aare Tammemäe from Redgate Capital. Henrik Igasta from SEB Enskilda on international investors added: “With big ticket private equity funds looking towards the Baltic market buying interest is reasonable, I am less doubtful about the selling side.”
The message from the private equity session organised with Baltic venture capital and private equity associations was very positive as to the high level of entrepreneurial spirit in the Baltics – many investment opportunities exist, especially among start-ups. Local private equity houses are also working on consolidating those companies through M&A transactions to “package” them for international investors.
The Forum was summarised by moderator Toomas Prangli from SORAINEN: “After mixed feelings by the investment bankers regarding the current status of the Baltic M&A market in general, we saw positive news on the future of Baltic private equity. Representatives of Vaasan, Olympic Entertainment Group and Estonian Post also described how M&A has helped them to grow business faster than otherwise would have been possible. In difficult times we need to think outside the box and hopefully everybody got some ideas how to make or attract equity investments for a brighter future.”
The Baltic M&A and Private Equity Forum, previously held in Riga and Vilnius, was last week organised for the third time by law firm SORAINEN together with media leaders Äripäev (Estonia), Dienas bizness (Latvia) and Verslo žinios (Lithuania). The forum gathered over 200 representatives from among M&A and private equity market participants, advisers and entrepreneurs interested in the topic.