Small and medium-sized enterprises (SMEs) are the backbone of regional economies, yet many struggle with financing gaps. Traditional banks, often seen as the primary funding option, can significantly limit business ambitions due to their conservative approach and lack of flexibility. “This is why alternative financing sources, such as debt funds, are becoming a crucial support system for SMEs—including those in the Baltic region,” says Ignas Šablevičius, Head of the Capitalica Debt Fund, an investment fund managed by Capitalica Asset Management.
“With years of experience in business financing, we see that traditional funding options often fail to meet the needs of SMEs—especially when businesses aim for rapid growth or implement non-standard projects. This is why we created Capitalica Debt Fund: not only to help investors put their capital to work and generate stable returns but also to provide companies with an alternative financing method that offers flexible and fast solutions,” explains Šablevičius.
A New Strategy for Local Business Growth
In the spring of 2024, Capitalica Debt Fund launched a new strategy focused on providing financing to businesses in the Baltic region and Poland, with a particular emphasis on Lithuania and Latvia. According to Šablevičius, the fund plans to invest more than half of its assets in Lithuanian companies to support their growth and long-term sustainability.
“SMEs in Lithuania and neighboring countries, especially younger or fast-growing ones, face two major challenges: first, they struggle to secure financing from banks; second, there is a lack of alternative funding sources in the market,” explains Šablevičius. “Our goal is to bridge this gap by pooling institutional and private resources into a debt fund that can provide the necessary capital for business expansion.”
The fund already offers financing by acquiring corporate bonds issued by companies and is preparing to launch direct lending services in the near future. This will enable even more tailored and flexible financing solutions for individual businesses.
“Capitalica Debt Fund” is designed for companies looking to accelerate growth, address non-standard financing needs, or overcome temporary liquidity challenges. We can support businesses planning acquisitions, shareholder buyouts, ambitious investment projects, or those seeking working capital solutions. Our fund is also willing to take on higher risks than traditional banks and offer customized transaction structures. So, even if a company’s financing need seems unconventional, we are ready to analyze it and propose a solution,” adds Šablevičius.
The fund intends to cover nearly all economic sectors, with certain exceptions—it will not finance activities related to fossil fuels, gambling, or tobacco. The minimum investment size starts at 200,000 Eur.
Alternative Financing Market – A Sector Full of Potential
The alternative financing market in the Baltics is still in its early stages, particularly when it comes to private debt funds. The ratio of private debt fund assets to GDP in the region is significantly lower—by at least several multiples—compared to the European average. According to Šablevičius, this presents a huge opportunity to expand financing solutions and support the growth of SMEs in the region.
“In Western markets, particularly in the U.S., alternative lenders such as bond and private debt funds are among the primary sources of business financing. In the Baltics, this sector is still underdeveloped, but we see great potential for rapid growth, and we believe our fund can play a key role in this transformation,” explains Šablevičius.
Over the next two years, Capitalica Debt Fund aims to attract additional investments and reach a maximum fund size of 100 million Eur. This will allow financing not only small businesses but also medium and larger enterprises, giving them the opportunity to execute ambitious business plans.
“Our fund is here for companies that are looking not just for capital but for a partner who understands their needs and can offer effective solutions. We are not afraid of complex or unconventional projects—on the contrary, we see them as opportunities to create success stories,” concludes Šablevičius.
