Weekly round-up: Baltic bloc the "new Nordics"?

unquote" analysed the current state of the Baltic private equity market and highlighted the opportunities for international investors. In the first of the two-part series, BaltCap CEO Peeter Saks pitched the Baltic region as the "new Nordics." Thanks to close ties with Scandinavia, its positioning within CEE and its trading relations looking east and west, the market looks poised for success: "In terms of a bridge between east and west, the Baltic region is very well positioned, and it's getting more and more integrated into the Nordics and the rest of Europe in terms of its export market," said Anne Hutton, a senior banker in EBRD's equity funds team.

The second part of the series explored the Baltic region as a haven for buy-and-build strategies, thanks to a wealth of consolidation opportunities. But is there enough debt in the market to support dealflow? "Banks are lending again for acquisition finance, although funds have to be careful to avoid the perils of high leverage coupled with typically higher levels of earnings volatility in the region," said Kaido Veske, an investment manager at Livonia Partners. And the recent launch of The Baltic Polish Mezzanine Fund indicates an increasing range of lending options in the region.

The robust public markets have enabled a tidal wave of private equity-backed IPOs, but have also brought much needed positivity to listed private equity funds. Reporting from the Oriel Securities listed private equity seminar, unquote" shared the thoughts of investment professionals at Electra, 3i and Graphite, and outlined the increasingly optimistic outlook for listed funds on the back of a strong exit market.

Writing exclusively for unquote", Reed Smith partner Leon Stephenson assessed the changing nature of the fund finance industry, suggesting that undrawn LP commitments are now an important asset against which fund liquidity can be obtained. Against this changing landscape, financial institutions are providing increasingly sophisticated facilities to funds. "A number of banks view this type of lending as quite high risk for the lender, but others are prepared to take a view on the underlying fund and its future performance, providing such facilities sometimes on an unsecured basis," wrote Stephenson. "These same institutions are often also prepared to make loans available directly to the GP with no recourse to the fund. Our prediction is that this trend is likely to continue as more and more funds become aware of the availability of such credit."

That's all from me this week but if you have any comments on this week's analysis, please send your thoughts to amy.king@incisivemedia.com.

You can continue to follow me and the rest of the unquote" team via @unquotenews for all the latest private equity and venture capital updates, and of course on unquote.com.

Amy King
Senior Reporter, unquote"

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