Although Lithuanian investors understand the importance of portfolio diversification and seek new investment classes with stable and satisfactory returns, they still lag far behind Western Europe in terms of assets managed by private debt funds. “Investments in bonds are growing rapidly in the Baltic states. However, to catch up with Western Europe, we still need to grow 10 to 20 times from where we are now,” estimates Ignas Šablevičius, fund manager of Capitalica Debt Fund, managed by Capitalica Asset Management.
According to the expert, in Europe, the total assets managed by private debt funds have grown by an average of 20% per year over the last decade and currently exceed half a trillion euros.
“When comparing Lithuania and the Baltic states with Western Europe, we still have a long way to go. The total assets managed by private debt funds in the Baltic region do not exceed 300 million euros. Compared to all of Europe, this is a nearly 2,000-fold difference, while GDP differences amount to about 100 times. So, although investments in bonds in the Baltic states are expanding rapidly, we still need to grow 10 to 20 times to catch up with Western Europe,” says I. Šablevičius.
The Capitalica Debt Fund manager emphasizes that there is no single recipe for encouraging Lithuanians to invest more actively in private debt. Financial education, the introduction of investment tools, the expansion of investment opportunities, and cooperation between state and international institutions are just a few of the factors influencing the popularity of new investment instruments.
“Investing in bonds and private debt represents an alternative financing option. It is no surprise that awareness and popularity of this asset class rose significantly after the 2008–2009 financial crisis, when stricter banking regulations limited credit availability. Businesses naturally had to find alternative financing solutions, which led to the growth of capital markets through bonds and private debt.
Another key factor driving the expansion of private debt investments was the war in Ukraine in early 2022, the tightening of bank lending conditions, and rapidly rising interest rates,” explains I. Šablevičius.
A Unique Opportunity
“At Capitalica Asset Management, we strive to make a variety of investment tools more accessible to the public. Of course, opportunities are often limited by minimum investment requirements. Since most investment funds in the market are closed-end funds, they are intended for sophisticated investors and often require a minimum investment of 125,000 Eur.
However, after evaluating all circumstances and consulting with the Bank of Lithuania, we decided to temporarily lower the minimum investment threshold for Capitalica Debt Fund to €25,000 until April 2025,” explains I. Šablevičius, a market expert with 20 years of experience.
According to I. Šablevičius, this decision was made to better meet investor needs.
“Recently, we have received many inquiries about investing in a private debt fund. Among those interested are both experienced and first-time investors. More and more people are becoming aware of this asset class and want to explore it.
Understandably, making a 125,000 Eur. first-time investment in an unfamiliar asset can feel daunting. Not to mention that 125,000 Eur. is objectively a significant amount. That is why we are providing the option to start with 25,000 Eur.
We believe that by achieving our targeted results, we can convince even the most skeptical investors that Capitalica Debt Fund is a stable and competitive fund,” he says.
The Capitalica Debt Fund aims for an annual return of 10%, with a total target capital raise of up to 100 million euros.
“Our goal is to share returns equally with investors—half of the fund’s earnings are reinvested, while the other half is distributed to investors, generating a passive income stream of up to 5% annual interest. We are currently preparing for our first capital distribution, which will take place in December,” explains I. Šablevičius.
