We invest in mezzanine transactions in Estonia, Latvia, Lithuania and Poland

BPM considers buy-outs, growth capital and capital restructuring transactions.

BPM backs proven business models and experienced management teams.

Our story

BPM is one of the few funds dedicated to mezzanine investments in the region.

BPM is an independent mezzanine financing provider for small and medium-sized enterprises in Baltic countries and Poland. BPM was founded in the end of 2014. It is managed by a team of four partners Kalmer Kikas, Martin Reinson, Priit Veering and Pawel Zabrzycki, all with extensive experience in mezzanine investing and an established contact network in the target region.

BPM is operating out of two offices in Tallinn, Estonia and Warsaw, Poland.

BPM is one of the few funds dedicated to mezzanine investments in the region.

BPM Mezzanine Fund and BPM Mezzanine Fund II have a combined capital commitments close to EUR 130 million, supported by a prominent investor base, which includes among others, the European Investment Fund and the European Bank for Reconstruction and Development.

BPM is the member of EstVCA.

Strategy

BPM seeks to provide mezzanine financing to companies with strong track record and excellent management practices in need of buy-out or expansion capital.

Clients

Small and medium-sized enterprises and lower midcap companies with strong track record and excellent management practices. BPM does not invest in start-ups and turnaround situations, as well as in listed companies and real estate.

Region

Estonia, Latvia, Lithuania and Poland.

Sectors

BPM has no sectoral focus and can consider a wide range of opportunities, excluding, however, tobacco, alcoholic beverages, firearms and gambling related businesses.

Mezzanine loan components

Typically mezzanine loans have 3 components: cash interest, payment-in-kind interest (PIK) and equity kicker/additional interest.

Day-to-day management of portfolio companies

BPM is purely financial investor, which means that BPM does not take active role in managing portfolio companies. BPM believes that management teams who have successfully run respective companies for years are more competent than BPM team members in managing their business. BPM will follow the financial performance of portfolio companies on a monthly basis. BPM team is motivated to support the investee in every possible way as one part of the Fund’s return is dependent on equity kicker.

BPM is committed to being a responsible investor.

Mezzanine

Mezzanine is an instrument which combines the characteristics of both debt and equity. With the help of mezzanine, the borrower/entrepreneur can:

  • Retain control over the company
  • Decrease or fully avoid dilution
  • Improve return
Advantages of mezzanine loan for an entrepreneur
  • Mezzanine investor might be willing to provide capital in a situation where bank financing is not available due to lack of hard assets to be pledged or too high leverage.
  • Second rank asset pledges behind senior lenders and/or share pledge are accepted. Sometimes personal guarantees are necessary.
  • With mezzanine loan the control over the company remains with the entrepreneur and dilution is limited or avoided, often the opposite with equity investors.
  • Mezzanine loan has less impact on cash flow as compared to senior debt through bullet repayment structure.

Mezzanine ranks behind senior debt in seniority, hence bearing higher risk. Increased risk
tolerance is compensated by higher returns in comparison to bank financing.

Portfolio investments
  • BPM does not invest in enterprises engaged in any of the activities appearing on the EBRD Environmental and Social Exclusion List and Category A list.
  • We have pre-investment review, investment portfolio monitoring and reporting process where besides financial and commercial factors all relevant environmental, social and governance issues and risks are considered.
  • We believe that ESG factors such as corporate governance, business relations, social and environmental responsibility, as well as customer and employee satisfaction are important for long term sustainability and good business results of our portfolio companies.
People
  • We comply with relevant regulations governing the protection of human rights, occupational health and safety standards and labour, environmental and business practices of the jurisdictions in which we conduct our business.
  • We offer an international and dynamic work environment, where every employee has an opportunity to develop its professional skills. Our goal is to have committed and motivated staff.
  • In our operations we are committed to provide employee-friendly work environment, based on non-discrimination, equal treatment and good work-life balance.
  • Employees and Partners are trained to ensure that everybody works in accordance with the approved Responsible Investment Policy.

Team

BPM Capital has been founded and is managed by a team of four partners, who have extensive experience in mezzanine investing in the region.

Kalmer Kikas
Managing Partner
Külli Kalamäe
Financial Manager

Our offices

Estonia

Roosikrantsi 11, 10119, Tallinn
+372 605 0073
info@bpmcapital.eu

Poland

Zajęcza 15, 00-351, Warsaw
+482 2244 1109
info@bpmcapital.eu

Latest news

BPM Mezzanine Fund II provided financing to a Latvian IT company Digital Mind AS for the buy-out of a leading Lithuanian business software implementor Alna

BPM Mezzanine Fund II usaldusfond has provided financing for a Latvian IT company Digital Mind AS to execute the first step in its ambitious growth path for the coming years. Digital Mind is a market leader in its core field of operations – digitalization of business processes and has a diversified customer portfolio of local blue-chip companies and governmental authorities in Latvia, as well as in Estonia. The financing by BPM enabled Digital Mind to acquire Lithuanian business software implementation company Alna Business Solutions. Alna’s key focus is on implementation of ERP software by Microsoft and SAP. It has developed proprietary software solutions as well. Similarly to Digital Mind, Alna has a very prominent customer base. Alna is active in the Lithuanian and Polish markets.

Commenting on the deal, Mr. Rinalds Sluckis, CEO of Digital Mind, noted: “the buy-out of Alna was a logical step in Digital Mind’s ambitious growth strategy. This acquisition means that we can offer our clients a wider portfolio of services and at the same time utilize our joint resources more efficiently. We are very excited to see that we are now present in all Baltic markets as well as Poland and have a significantly wider product portfolio. I believe that consolidation in our market is inevitable and we are in a good position to drive this process forward.”

For BPM team, it marked the first transaction from its freshly closed second fund – BPM Mezzanine Fund II usaldusfond, which marks the continuation of mezzanine strategy of the first fund. Martin Reinson, Partner of BPM, said: “We are very happy to be able to back such ambitious and experienced management team in its growth journey. It is an outstanding opportunity to invest in Baltic IT businesses with such prominent customer base. We share the view of Digital Mind management team that there is definitely room for consolidation in this niche in the Baltics and are very excited to back them in this process.”

For further enquiries, please contact:

BPM: Martin Reinson, e-mail: martin.reinson@bpmcapital.eu

Digital Mind: Rinalds Sluckis, e-mail: rinalds.sluckis@digitalmind.lv