July 25, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

The new INVL Alternative Investment Fund launched by the INVL investment management and life insurance group has closed on EUR5.5 million (US$5.6 million) in funding from 572 investors. 

INVL is the leading investment management and life insurance group in the Baltic region managing pension funds, private equity and alternative investments, life insurance interests, and mutual funds.

In business for 30 years, the group engages with more than 290,000 clients across Lithuania, Latvia, and Estonia, along with international investors that have entrusted the group to manage more than EUR1.7 billion (US$1.73 billion) in assets.

The INVL Alternative Investment Fund is the first of the group’s funds to offer retail investors access to a diversified portfolio of alternative asset classes: land and forestry, private equity, infrastructure, renewable energy, and real estate, in order to mitigate the risk profile.

With a total term of 10 years (and the possibility for a two-year extension), the fund opened to investments starting at EUR5,000 (US$5,102) during a rather difficult time – one month after the start of distribution, war broke out in Ukraine, both alarming the public and sparking reserve and uncertainty in the market.

“We see growing maturity in society as regards financial literacy and demand for long-term investment products: most of the clients who invested understand the impact of inflation and seek to put their savings to work, while at the same time looking for more interesting alternatives to diversify their risk,” said Dr. Dalia Kolmatsui, head of retail services, INVL.

“Surveys of our clients show that capital markets are still hard to understand and investments in physical assets seem much more dependable. Alternative asset classes and funds that invest in physical assets are often only available to informed investors who can put up at least EUR 125,000, and that’s difficult for smaller investors,” Kolmatsui continued.

“We designed this product with our clients’ specific desires in mind, and we’re pleased to have offered an investment opportunity that meets their needs at the right time and to have successfully achieved our objectives for the distribution of the fund’s units.”

Vaidotas Rūkas, CIO at INVL, noted that as uncertainty is easing, the fund has already made its first investments in alternative assets, with agreements in place to back a private equity fund managed by Blackpeak Capital, focused on growth companies in Southeast Europe, and the INVL Sustainable Timberland and Farmland Fund II (STAFF II).

Launched in November 2020 with an initial target of EUR100 million, STAFF II operates with the intention of heavily focusing on the sustainable management of forests and arable land, taking into account not just conservation of natural resources, but also corporate social responsibility.

One month later, by December 2020, the fund had raised US$38.3 million through an initial offering toward its targeted goal of EUR 100 million (US$102 million) from private investors to back sustainably-managed agricultural land and forests in the Baltic Sea region and Central and Eastern Europe.

At the same time, STAFF II made its first capital commitment, acquiring seven companies from ag business group Linas Agro Group for EUR13.6 million (US$13.88 million). These companies indirectly own approximately 2,000 hectares (4,942 acres) of farmland in central Lithuania, which will be leased back for a period of 25 years by Linas Agro.

Within months, in June 2021, STAFF II raised a further EUR18.5 million (US$18.9 million) through a second offering to hold a second close at EUR 51 million (US$52 million).

Rūkas noted that investors see the alternative asset investment class as an attractive option for diversifying an existing portfolio, given their greater stability and favorable risk-return ratio when faced with market volatility.

Another benefit is how physical assets tend to retain their value during periods of inflation, like what is currently happening in Lithuania. Typically, for investors with smaller war chests there have been more limited investment options – life insurance, pension funds, or mutual funds.

“By selecting the best-suited alternative investments and forming a mix of them from different asset classes and funds, we reduce the investment portfolio’s risk,” said Rūkas. “The investors themselves, having relatively small amounts available for investing, could not diversify their own investments in that way, since the minimum investment in one alternative fund is usually too large for them.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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