Technology sector investment opportunities in the Baltics Private equity investor’s view Vygandas Juras Partner BaltCap Management
2 Profile of BaltCap Management Largest private equity fund management company in the Baltics Four funds of 90 mEUR under management in the Baltics Offices in Helsinki, Riga, Tallinn & Vilnius (10 professionals) Investment criteria: Investment size from 1 to 5 mln EUR (SME less than 1) Preference for growth capital financing Both minority (min 15%) and majority positions All basic industries 3-5 year investment horison Exit through sale to a strategic investor Technology exposure: Microlink, Informacines Technologijos, Ashburn International, Hansa Electronics
BaltCap Management 3 Outline Introduction to our firm How venture capital/private equity works What does it take to have a star in the Baltic technology sector? Sector challenges and opportunities Investment trends
BaltCap Management 4 Levels of private equity investment Time Money Startup Expansion Mezzanine Established Seed Financing available in the Baltics BSEF Balaef BaltCap VBRKV ŠBIV Startup BaltCap LHV ESTAG
BaltCap Management 5 Economics of venture capital/private equity fund EUR 26EUR Total loss1 0.0Total loss1 0.5Dying dead1 0.5Living dead1 1.0Living dead1 2.0Average performer1 3.0Average performer Star1 10.0Superstar1 Distributed, EURPerformanceInvestment, EUR Star
BaltCap Management 6 Investor targets A leading local/regional company A local company-specialist with an innovative, globally competitive product Laser technology Medical devices GSM-related services …..? FASTER, BETTER, CHEAPER THE BRAVE NEW WORLD
BaltCap Management 7 Global competitiveness defined Global competitiveness is an ability of Baltic companies to offer unique goods and services marketable in international markets: Products/services that have current utility in foreign markets; Capability to commercialise, market and sell.
BaltCap Management 8 Major challenges in gaining competitive advantage Gaining international managerial expertise Developing a global perspective Adjusting current valuation expectations Overcoming control or “my baby” syndrome
BaltCap Management 9 Future Baltic technology investment trends More private equity, less venture capital M&A, consolidation financing –Systems integrators –Automation consultants –Network infrastructure companies –Telecom services providers Buyouts –Family businesses –Fund exits