By Mark McSherry

The European Investment Fund (EIF) said it is joining forces with Lithuanian national development institution UAB ILTE to provide as much as €191.6 million for non-bank credit providers to invest in companies in the country.

The funding for these credit providers – also known as private credit funds – involves ILTE support of €95.8 million that is being matched by the EIF.

“The initiative will accelerate the development of capital markets in Lithuania and builds on previous ILTE cooperation with the EIF, which is part of European Investment Bank (EIB) Group,” said the EIF.

“The goal of the new initiative is joint investments in up to five private credit funds, generating much-needed financing for Lithuanian companies.”

EIF Chief Executive Marjut Falkstedt said: “This investment will help further develop the local financing ecosystem in Lithuania, reducing the dependence on banking finance.

“Ultimately, this creates more opportunities for local companies to grow their businesses, create jobs and drive forward the economy.

“We are glad to be contributing to strengthening the capital markets through a mix of local public resources and EIF funding.”

The planned investments will help foster a senior private credit market in Lithuania as an alternative source of financing for companies, diversifying their financing options.

“Access to finance for business in Lithuania is one of the lowest among EU countries,“ said Dainius Vilčinskas, CEO of ILTE.

“The total amount of loans to businesses is 14% of GDP, while total bank financing is 35% of GDP.

“This step will allow companies to have more alternatives in choosing sources of financing, to keep their expansion plans on track, to develop new projects, while promoting competition and mobilising financing for business will help to increase private capital attraction.

“Global trends show that private debt funds are an attractive instrument and many funds will only increase their investments in this asset class.”