UAB Investicijų ir verslo garantijos (Invega) has set up a subsidiary UAB Kofinansavimas to ensure transparent and effective implementation of the new financial engineering instrument Co-investment Fund I. The subsidiary of Invega will manage the new Co-investment Venture Capital Fund I that has been earmarked up to EUR 11 million from the resources returning to INVEGA by the Ministry of Economy.
According to Marius Skarupskas, Vice-minister of Economy and Chair of the Supervisory Board of Invega, the subsidiary set up by Invega will implement the new venture capital instrument Co-investment Fund I designed by the Ministry of Economy for the development of the Lithuanian venture capital market, growth of new participants of the venture capital market, thereby increasing capital availability to new prospective Lithuanian companies that have limited access to business financing offered by banks.
“We are taking a new step in promoting the development of the venture and equity capital market in Lithuania believing and expecting that the investments of the new Co-investment Venture Capital Fund I will make it easier for ambitious start-up projects to access financing,” Invega CEO Audrius Zabotka shared his plans. “Moreover, this instrument should also encourage companies to look for additional capital on the First North capital market and develop a different structure of financing of corporate projects”.
Since the limited partnership (LP) is currently the most acceptable form of establishment and operation of venture capital funds in Lithuania, this legal form will also be used for the new Co-investment Fund I. UAB Kofinansavimas, the subsidiary set up by Invega, will participate in the activities of the LP as the general partner and Invega will be the investor of Co-investment Fund I and the limited partner whose contribution to the LP will be financed by the INVEGA Fund. The LP will be managed and decisions will be adopted in the manner prescribed by the Law on Partnerships of the Republic of Lithuania.
The activities of the Invega subsidiary will be based, the company will be managed and all its decisions will be made according to the Law on Companies of the Republic of Lithuania. Members of the Board will be selected under an open competitive procedure. The newly appointed Board of UAB Kofinansavimas will then appoint the Director of the Company.
Together with private investors, Co-investment Fund I will invest in micro and small enterprises operating for up to 5 years since their registration which have not allocated their profits. Investments will only be made into potentially viable projects able to create the expected investment return and ensuring easily predictable exit from investments.
Private investors, which may include venture capital funds or at least three teams of business angels, will be investment initiators able to keep a regular flow of proposals to invest into prospective companies to the fund manager. The selection procedures for potential private investors are scheduled to take place as soon as this autumn.
UAB Kofinansavimas, the subsidiary of Invega, is expected to participate in companies in which investments will be made as a silent investor. The relevant provision will be included in shareholder agreements concluded with private investors and will be negotiated on a case-by-case basis.