Raft Capital launches €50 million fund to grow Baltic companies
Raft Capital Baltic Equity Fund, an investment fund set up by private equity fund manager Raft Capital Management, has raised €50 million in investments and plans to invest in high-growth companies in Baltic States. In the future, it will also look for potential acquisitions in the Nordic countries and Poland.
The management team of Raft Capital Management, licensed by the Bank of Lithuania to engage in investment activities, has experience working in Nordic financial and global professional institutions. The team includes Artūras Gegužis, Andrejus Boicovas, Gintautas Galvanauskas and Imre Visse (Estonia, Tallinn).
According to Dr. Artūras Gegužis, Partner at Raft Capital Management, the team brings together unique knowledge of the local market, extensive experience in investment execution and management, and knowledge of the target markets.
"All four of us have collaborated on intricate financial initiatives, with three of us having worked together in SEB investment banking and venture capital firms. We joined forces because we have similar interests, there are business prospects and the belief that we can help companies become leaders in international business, not only in the Baltic region, but also in the global market", said Mr. Gegužis.According to him, this belief is reflected in the choice of the word "raft" in a fund name, which means a raft that can safely carry one over the obstacles to a preferred destination point.
Focus on growing companies
Raft Capital, according to Mr. Gegužis, concentrates on small and medium-sized firms in the Baltic region that have room to grow. These include manufacturing companies that export, companies that innovate and create new products, service providers, and other businesses.
Our objective is to collaborate with the management team in order to expand these businesses, propel them forward, and attract the interest of financial and strategic investors from the Nordic and European Unions
"It's critical for businesses to stand apart from the competition in some way. Instead of being a company owned and operated by one or a small group of people, it must have an organizational structure. Our objective is to collaborate with the management team in order to expand these businesses, propel them forward, and attract the interest of financial and strategic investors from the Nordic and European Unions", Mr. Gegužis clarified.
According to a Raft Capital partner, dialogue with the specific companies to be invested in is ongoing. The plan is to invest between €2 and €10 million per company. Mr. Gegužis asserts that these businesses should have sales of between €3 and €50 million and EBITDA of between €0.5 and €5 million. He did not completely rule out the idea of buying out smaller businesses.
"Our primary investment region, the Baltic States, is seeing economic growth above the EU average, but there are less chances for business expansion due to a shortage of equity capital sources. Furthermore, in order to attain sustainable long-term growth and draw in the interest of reputable strategic and financial investors, the majority of Baltic enterprises must move into larger export markets", Mr. Gegužis stated.
According to him, Raft Capital would also consider investing in companies in the neighbouring Nordic countries and Poland if these investments had clear synergies and benefits for the portfolio companies.
The plan is to invest between €2 and €10 million per company
Mr. Gegužis noted that the fund would follow explicit ESG guidelines.
Raised €50 million
Through Raft Capital Baltic Equity Fund, investments are made by the European Investment Fund, INVEGA, pension plans administered by Luminor investment management companies in Lithuania, Latvia, and Estonia, and other private investors. The total amount of investment attracted is €50 million.
“The EIF is glad to play its catalytic role in supporting Raft Capital, a new addition to the Baltic private equity ecosystem,” says Marjut Falkstedt, EIF Chief Executive. “This investment has been made possible via the Baltic Innovation Fund 2 programme which is a great example of cooperation between the three Baltic States and the EIF to promote investments in the region, making it a good fit for Raft’s strategy of supporting Baltic companies in their growth and expansion.”
Negotiations are already underway for the fund's second round of funding with pension funds and institutional investors. It is predicted that it might draw an additional €20–30 million in investment, hitting or surpassing the €70 million goal
The Head of INVEGA's Venture Capital Products, Vilija Šveikauskienė, expressed her happiness at having another capable and knowledgeable group of investors in Lithuania.
"We intend to invest in long-term initiatives and expect to support the growth of creative, sustainable enterprises by giving Raft Capital €20 million from the Development Funds III financial instrument. The investing philosophy of the fund will balance attractiveness, profitability, and financial risk in order to foster sustainability. Eight to twelve investments are anticipated from the fund, which might include high-potential industrial firms for exports, as well as businesses in the innovative technology, renewable energy, or B2B and B2C service sectors", stated V. Šveikauskienė.
According to Mr. Gegužis, a partner at Raft Capital, negotiations are already underway for the fund's second round of funding with pension funds and institutional investors. It is predicted that it might draw an additional €20–30 million in investment, hitting or surpassing the €70 million goal.
"Investors believe in our experience and vision. And we believe that when businesses are built in a transparent, sustainable manner that ensures their long-term growth potential, value is created and provided. We will be able to support Baltic companies at every step of their growth, including restructuring, global expansion, new product development, acquisitions, and strategic repositioning, thanks to our experience and managerial skills", emphasized Mr. Gegužis.
