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Fund Profile:
Baltics Small Equity Fund LLC (BSEF)
Main Offices: Lukiskiu str. 5-319, Vilnius 2600, Lithuania
Pärnu mnt 142, 6th Floor. Tallinn 11317, Estonia
Lacplesa 29-2, Riga, LV 1011, Latvia
Website: http://www.bsef.ee
Email: gdodge@eunet.lt
Fund Manager: Small Enterprise Assistance Funds (SEAF)
Key Personnel: Gary Dodge, Director General
Established: 1998
Total Committed Capital: US $10.7 million
Amount Invested: US $7.1 million (66%)
Shareholders:
European Bank for Reconstruction and Development (EBRD)
Baltics Special Investment Facility (BSIF)
The Baltics American Enterprise Fund
Small Enterprise Assistance Funds (SEAF)
Geographic Focus: Estonia, Latvia, and Lithuania
Background
The Baltics Small Equity Fund LLC (BSEF) is a developmental venture capital fund that invests in small and medium-sized enterprises (SMEs) in Estonia, Latvia, and Lithuania. BSEF was the first SEAF fund to operate in more than one country. BSEF invests in growth-oriented companies and trustworthy entrepreneurs, providing them with financial partnership and technical assistance. BSEF is not a bank. BSEF invests by acquiring newly issued shares from a Portfolio Company, becoming a partner in the business. BSEF does not typically offer loan financing. After investing, BSEF uses its experience and contacts with the goal of helping the business grow and profit. If successful, the shares of all the owners, including BSEF, grow in value. Thus, both BSEF and the entrepreneurs benefit from the participation of BSEF in the business. The area is increasingly attractive strategically to Nordic companies, so that BSEF is uniquely positioned to provide capital and assistance to strong, growing Baltic companies with an eye towards sale to a Nordic strategic partner.
Social Mission
By providing affordable financing to private sector SMEs in underserved markets, the Fund seeks to build the capacity of SMEs to expand production, access new technology, improve competitiveness, reach wider markets, increase profits, and achieve long-term commercial sustainability. By supplementing investments with technical assistance, SEAF aims to help develop business and management skills, improve corporate governance and transparency, and formalize legal structures, business structures, and tax reporting. The development of a vibrant and sustainable SME sector will help to generate new employment, export revenues and government tax revenues; stimulate economic growth; promote free markets; improve social welfare; and contribute to political stability in developing countries. The Fund also seeks to provide examples of successful private enterprises to entrepreneurs and investors, help SMEs establish new customer and banking relationships with the formal banking sector, create a culture of equity investment, institutionalize investment methods and structures, and help to develop the country's overall financial sector.
Investment Information
The Fund invests in enterprises in Estonia, Lativia, and Lithuania that are engaged in a broad diversity of sectors, with a special emphasis on companies that are export-oriented, those with strong growth prospects, and those engaged in the following industry sectors: agribusiness, including food processing, packaging and distribution; tourism; light industry and manufacturing; and essential business services.The Fund will not invest in enterprises engaged in the following activities: banking, insurance, and financial services; speculative investment activities such as real estate or commodities trading; production or sale of tobacco products or hard alcohol; arms manufacturing or other military-related activities; operation of casinos or other gambling-related activities; operation of abortion clinics; or activities harmful to the environment. BSEF can typically invest up to US $400,000 (in local currency equivalent) in a single business. With the capital it invests, BSEF acquires newly issued shares, giving BSEF 25% to 49% of the total equity of the company. BSEF will not take a majority share, except in unusual circumstances. BSEF seeks to support existing management, not to supplant it. Candidates have from 5 to 100 employees, annual revenues between US $200,000 and US $2.0 million, and owners' equity of US $100,000 to US $1,000,000. The Fund has no co-investment preferences
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