Merito Partners targets EUR 50m for debut growth equity fund

Agne Mazeike
20 January 2023

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Latvian investment company Merito Partners is aiming for a hard-cap of EUR 50m for its debut growth equity fund, Managing Partner Mikus Janvars told Unquote.

Merito Private Equity FUND I was launched in November, alongside its first investment into the Latvian self-service terminals specialist, TapBox, Janvars said.

The vehicle has more than EUR 12m in commitments from the firm's founders and partners Janvars, Mārtiņš Baumanis, Aigars Kesenfelds, and Jānis Pizičs, Janvars said. Law firm Ellex assisted in setting up the fund, he added.

The team expects to start speaking with external LPs at the end of Q1 2023 or in early Q2 2023, initially prioritising high net worth individuals and family offices in the Baltics, Janvars said. Once it has a track record with private investors, it expects to approach institutional investors, such as regional pension funds, he added.

It would like to raise the EUR 50m fund within the next 12 to 18 months, Janvars said, adding its closing dates have not been formally scheduled.

The fund has a four-year investment period, with the clock ticking from November 2022, Janvars said. Its lifecycle is 10 years, with a possibility for two one-year extensions, he added.

It will seek to build a portfolio of 12 to 18 companies, offering growth equity tickets from EUR 500,000 to EUR 5m, Janvars said.

Its investment strategy is broad, as it could invest into startups or established SMEs, acquiring minority stakes starting from 20%-25% and up to 100% of ownership, Janvars said. Nonetheless, it would offer incentives for the management in any scenario, he added.

Merito is a sector-agnostic investor, Janvars said. In general, it is not keen on project-based businesses or those active in government tendering processes, he added. It likes companies with strong brands, as well as recurring revenues, he said.

While it could invest across the EU, it initially expects to source deals primarily in the Baltics, he added.

Merito plans to structure its financing in tranches, meaning that it will have extra investment capacity for each of its portfolio companies, Janvars said. It does not have a particular part of the fund earmarked for follow-on investments or funding of add-on acquisitions, although growth through M&A could be discussed in cases when there is space for consolidation, he added.