RIGA - The European Commission has approved Latvia's plan to set up a fund, which will make up to EUR 100 million available to large producers affected by the Covid-19 crisis.
Kristine Liepina, a representative of the European Commission's Representation in Latvia, told LETA that in line with temporary regulations, Latvia informed the European Commission about the plan to set up the fund of at least EUR 100 million in order to shore up the liquidity and capital of Latvia's large enterprises affected by the coronavirus pandemic.
According to the scheme, the support will be provided in the form of subsidized debt and recapitalization instruments. The government will invest EUR 50 million into the fund, while a commercially managed Latvian pension fund will provide EUR 50 million, said Liepina.
The fund also aims to raise investment. All investors who will be making investments in the fund will have to follow the same rules regarding risk sharing, remuneration and other provisions of the partnership agreement. The fund will be managed by Latvia's Development Finance Institution Altum.
The European Commission recognizes that Latvia's plan is in compliance with the European Union's temporary regulations. The Commission has concluded that the planned support measure is proportional, appropriate and necessary to deal with serious disruptions in the Latvian economy in line with the EU's temporary regulations.
As reported, up to EUR 100 million will be made available to help large manufacturers cope with the impact of the Covid-19 crisis, according to draft regulations on capital investments in companies affected by the Covid-19 reviewed at a meeting of Finance Minister Janis Reirs' (New Unity) task force to support businesses and employees on Wednesday.
The Finance Ministry told LETA that, after the regulations are adopted by the Cabinet of Ministers, an alternative investment fund will be set up that will be managed by Development Finance Institution Altum.
The purpose of the fund will be to support large companies that are economically viable and well-managed, but are experiencing temporary difficulties due to the impact of the Covid-19 pandemic, and those companies that are ready to adapt or revise their current business model as a result of the impact of Covid-19.
Public financing of the fund will amount to EUR 50 million and it is projected that private funding will also amount to EUR 50 million. The fund will invest in companies' capital, make quasi-equity investments and also invest in corporate bonds, provided that they are listed on the Nasdaq Riga stock exchange.
According to the Finance Ministry, the maximum amount of the fund's investments in one company will not exceed EUR 10 million, and the fund will invest in about thirty large companies in total.