ALTUM and ILTE Start a New EUR 50M Chapter for Baltic Capital Markets

• ILTE and ALTUM launched the EUR 50M Baltic Capital Markets Acceleration Fund to strengthen the capital markets of Lithuania and Latvia
• The fund supports SMEs and mid-caps preparing for listings on Nasdaq Baltic exchanges
• 1 Asset Management manages investments, focusing on scalable, listing-ready companies across industries
• BCMAF’s mission is to boost liquidity, attract investors, and enhance regional economic resilience

This October, Lithuania’s development bank ILTE and Latvia’s ALTUM announced the establishment of the Baltic Capital Markets Acceleration Fund (BCMAF). The fund is managed by the Lithuanian company 1 Asset Management, and its total size exceeds EUR 50M. Its aim is to provide long-term financing to Baltic SMEs and mid-cap firms preparing for stock market listings, primarily in Lithuania and Latvia. By investing through new share and bond issues over 10 years, it is expected to boost equity and bond listings on Nasdaq Baltic exchanges, enhancing market liquidity and access to growth capital across the region.

The Parties Involved in a Nutshell

ILTE is Lithuania’s national development bank, established to promote sustainable economic growth and competitiveness through targeted financial instruments. It supports projects that enhance innovation, exports, and long-term investment in Lithuanian businesses. ILTE also collaborates with European and regional partners to strengthen access to capital and deepen local capital markets. Earlier this year, ILTE was involved in the creation of MILInvest 2 – Lithuania’s state-organized VC instrument to support defense companies. ILTE’s involvement in BCMAF amounts to EUR 18.8M.

ALTUM is Latvia’s state-owned development finance institution, focused on promoting entrepreneurship, innovation, and sustainable development. It provides loans, guarantees, and investments to support businesses at various growth stages, filling financing gaps left by commercial banks. ALTUM also plays a key role in implementing EU and national financial programmes to strengthen Latvia’s economy. The organization committed EUR 20M to the new fund.

1 Asset Management is a licensed investment management company operating in the Baltic region, specializing in private equity, real estate, and capital market investments. It focuses on long-term value creation and sustainable growth for investors and portfolio companies. As the manager of the Baltic Capital Markets Acceleration Fund, its mission is to bridge private and public capital markets in the Baltics.

Capital Market Growth Through Regional Unity

As stated by Latvia’s Minister for Finance Arvils Ašeradens, ‘The government is determined to expand company access to financing and investment opportunities, with the goal of achieving stock market capitalization of at least 9% of GDP by 2027. The IPO fund will drive business sector growth, providing financing to SMEs and supporting innovation, expansion, and job creation. This will create a favourable environment for company growth and enhance the Baltic region’s competitiveness.’

With its involvement in BCMAF, ILTE commits to strengthening private capital markets in the Baltic States. Its role is not only to mobilize capital but also to foster long-term economic growth and resilience for businesses and communities. ILTE’s acting head of business development unit Inga Beiliūnienė firmly believes that by acting as a region rather than as individual small countries, the parties involved are poised to build scale more effectively, attract investor confidence, and unlock greater opportunities.

ALTUM’s chairperson of the management board Reinis Bērziņš emphasizes that the development of Baltic capital markets is essential to ensure that our companies have access to the financial instruments they need to grow and compete globally. ALTUM’s commitment in this first-of-its-kind initiative helps Baltic companies bridge the critical gap from private to public capital.

‘The Baltic region needs a more robust continuum of financing options financing gap at the scale-up and growth stage — when companies have already proven their business model and started expanding internationally, but require larger long-term equity capital to continue scaling.

At this stage, local equity funding options remain limited, and traditional banks are often reluctant to lend to innovation-driven or export-oriented companies without hard collateral.

So there is a clear need for more institutional growth capital to help strong Baltic companies compete globally rather than slow down their momentum or look for capital abroad,’ ALTUM’s head of the financial intermediaries department Ralfs Jānis Punāns explains.

Cross-Border Cooperation to Align National Priorities

It’s worth noting that given that BCMAF implies cross-border partnership, the need to manage or align differing national development mandates, regulatory frameworks or incentive structures arises, to avoid possible friction. According to Ms Beiliūnienė, this challenge will be addressed primarily through open dialogue and by ensuring alignment of interests where national priorities may differ.

‘The Baltic Capital Market Acceleration Fund builds on a well-established tradition of cooperation among the Baltic national development banks—such as the successful joint implementation of the Baltic Innovation Funds—providing a solid foundation of experience in developing and managing shared initiatives and programmes,’ she notes.

Industry-Agnostic, Market-Focused Support for Listing-Ready Businesses

BCMAF emphasizes an industry-agnostic approach, thus remaining sector-agnostic but focused on segments where private capital alone has not been sufficient to stimulate growth.. Strategizing identification and addressing market gaps — that is, areas of the economy where financing needs cannot be fully met by private players alone, ILTE applies the only specific limitation to the real estate sector, which, in this organization’s view, does not face the same financing shortfalls as other segments of the Lithuanian economy.

To ensure balanced sector exposure, 1 Asset Management sets a limit of investing no more than 25% of committed capital in any single industry. While this approach limits concentration risk, it also allows the flexibility to pursue the strongest opportunities across different sectors.

‘We target businesses with clear listing potential – those combining scalable business models, sound governance, and management capable of operating under public market standards. The Baltics already host both mature names that could list soon and emerging companies expected to reach readiness within our fund’s term. This dynamic approach should ensure both diversification and focus on genuine listing candidates,’ 1 Asset Management’s fund partner Rokas Žemaitis clarifies.

BCMAF targets both SMEs and small, innovative mid-cap companies, broadening the fund’s investment universe to include companies with clear potential for public listing in the near term.

‘Building this pipeline requires proactive effort. While we already maintain strong relationships across the Baltic markets and receive inbound deal flow, we also conduct our own market screening and engage directly with promising businesses. Additionally, we see BCMAF playing an important educational role – helping local business leaders better understand how public markets can serve as a powerful tool for growth and succession,’ Mr Žemaitis continues.

Beyond valuation, 1 Asset Management assesses the companies’ qualitative criteria such as management quality, business scalability, clarity of the growth roadmap, and readiness to adopt governance and transparency standards required for public listing. The fund’s capital signals confidence in management from whom a clear, typically a 3–5-year roadmap and disciplined execution toward sustainable growth is expected.

Strategic Milestones and Market Momentum

Mr Žemaitis shares that the first year’s priority is to establish a strong foundation for both the fund and the market. The aim is to make 1–2 investments in established Lithuanian or Latvian companies. In parallel, 1 Asset Management is actively working toward increasing the fund size in order to back a larger number of companies preparing for the public markets.

‘As our investment period spans six years, throughout it we aim to build a diversified portfolio of high-quality minority holdings. By the midpoint of this period, we see the potential for the first listings or near-listing transactions emerging from the portfolio, provided market conditions are supportive. Should even earlier opportunities arise, we intend to capitalize on them to demonstrate the proof of concept behind BCMAF’s strategy and build momentum for further listings,’ the fund partner states.

Navigating Evolving Market Conditions with Flexibility

While BCMAF’s primary goal is to guide portfolio companies toward successful public listings, the management team recognizes that market conditions may not always support that outcome within the planned timeframe. In such cases, BCMAF retains flexibility to assess alternatives on a case-by-case basis. Depending on the situation, this could involve extending the holding period, exploring private secondary exits, or seeking other liquidity events. The chosen path would depend on the company’s fundamentals, market conditions, and alignment with investor interests – always with the objective of preserving and maximizing long-term value.

‘Exits will be fully flexible and commercial — including cross-border IPO listings, secondary block trades or institutional placements — always based on price targets and market timing, and not limited to local exchange liquidity,’ Mr Punāns tells ITKeyMedia.

‘It is no secret that some investments will inevitably underperform or even be written off — such is the nature of any investment activity. However, as a market-gap investor, ILTE recognizes that certain economic sectors or geographic regions would remain underserved without its involvement, and we view such neglect as unacceptable. Therefore, our approach is holistic: we aim to maintain operational sustainability and marginal profitability while simultaneously pursuing broader developmental and socioeconomic objectives,’ Ms Beiliūnienė adds.

Commenting on the risk view on market liquidity, she states that the liquidity challenge in the Baltic markets is a classic chicken-and-egg dilemma as the parties involved continuously ask themselves whether limited liquidity stems from a lack of IPO activity — as existing shareholders may not have recognized opportunities to raise capital — or from investors’ limited appetite for local listings.

BCMAF will address both the ‘chicken’ and the ‘egg’ simultaneously: by acting as a private equity vehicle that supports Baltic companies on the path to IPOs, and by serving as a cornerstone investor to enhance post-listing liquidity.

‘In the most conservative scenario, BCMAF operates as another private equity fund, and in the best-case scenario, it stimulates market activity and encourages greater local investor participation. While liquidity risk cannot be mitigated by the Fund alone — it requires joint efforts from both private and public stakeholders. We see our initiative as an essential step in the right direction,’ Ms Beiliūnienė comments

While 1 Asset Management doesn’t foresee or anticipate any structural changes requiring a shift in its core strategy concerning BCMAF, the mandate remains flexible to evolving market conditions. The fund is designed to operate effectively across different scenarios, supported by close collaboration with Nasdaq Vilnius and Nasdaq Riga, which provides an ongoing pulse on regional market dynamics.

‘Should the Baltic exchanges consolidate or attract large cross-border listings, we would adapt accordingly – helping portfolio companies meet additional governance and disclosure standards and preparing them for broader investor exposure. Conversely, if the market remains shallower than expected, we would consider dual listings or alternative exit routes. Ultimately, BCMAF’s flexibility ensures we can pursue our central mission under different scenarios,’ Mr Žemaitis assures.

A Catalyst for Trust and Long-Term Investment

‘BCMAF is a timely and strategic step toward deepening the Baltic capital markets. By supporting companies on their journey to a public listing, it not only unlocks growth and liquidity but also reinforces trust in the region’s financial ecosystem, something essential for attracting long-term institutional investment,’ Nasdaq Vilnius’ president and CEO Gediminas Varnas concludes.

The creation of the Baltic Capital Markets Acceleration Fund is a pivotal step in strengthening the Baltic region’s capital markets by providing much-needed long-term financing to high-potential SMEs and mid-cap companies. This initiative not only enhances access to growth capital but also drives the region’s overall economic development by preparing businesses for public listings, thus fostering greater market liquidity. By filling critical funding gaps, BCMAF reinforces the region’s competitiveness and helps attract institutional investment, ensuring a more resilient and dynamic financial ecosystem in the Baltics.