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EUR 60 million EstFund Initiated by KredEx and European Investment Fund

EUR 60 million EstFund Initiated by KredEx and European Investment Fund

KredEx, the EIF European Investment Fund, and the Estonian Ministry of Economic Affairs and Communications have confirmed an agreement to officially authorize EstFund. The EUR 60 million fund-of-funds will supply backing for various venture capital accounts by which high growth Estonian enterprises may be financed. While the prosperous Baltic Investments Fund has always aimed toward more prominent or developed projects, EstFund’s primary focus will be Small & Medium enterprises (SME) and those in earlier stages.
SMEs will enjoy more access to business financing by a combination of three of EstFund’s own reserves and a contribution by EIF. The three selected equity capital funds include:

  • a EUR 30m Venture Capital Fund,
  • a EUR 15m Expansion Capital Fund,
  • a EUR 15m Business Angles Co-Investment Fund.

The EIF endowment to EstFund will be the first investment that The European Investment Fund has ever made to a Structural Fund-supported fund-of-funds. The European Fund for Strategic Investments (EFSI) will be responsible for allowing this pioneer transaction to pass. The commencement of EstFund will also mark the first time that the EFSI and European Structural and Investment (ESI) Funds will combine. The Commission and the EIB only recently released new guidelines in regards to how to merge the two organizations.
EUR 48 million will be provided by the Operational Program for Cohesion Policy Funds 2014-2020 sustained by the European Regional Development Fund. On behalf of the Estonian Ministry of Economic Affairs and Communications, The European Investment Fund will manage this asset. EIF will also commit a EUR 12 million investment supported by EFSI to this sum. The total working capital, valuing EUR 60 million, is substantially improved; formerly, not all Lithuanian and Latvian fund-of-funds could have gained from an EIF co-investment.
Roger Havenith of EIF European Investment Fund remarked that combining forces with the Estonian government and KredEx will help EstFund and EIF to efficiently funnel capital to Estonian businesses. He was also enthusiastic about the integration of The European Investment Fund and EFSI. KredEx CEO Lehar Kütt shares Havenith’s sentiments; he stated that the extra means provided, as well as the encouragement of benefactors to invest, will support Estonian small business immensely. Using resources from the European Fund for Strategic Investments (EFSI), EstFund will support SME from their shaky beginnings, offering more risk capital for new business ventures. Between the success of the Baltic Investments Fund and the establishment of the complementary EstFund, Estonia may now have the potential to reach international prestige.

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