Private Equity Financing—for whom and why? 3 questions for a portfolio company

Raising capital is a growing challenge for founders and managers/CEOs, who spend much of their time searching for additional funding and growth opportunities. This is where private equity (PE) could come into play: PE funds are constantly looking for investment opportunities in companies with the potential to grow and the ambition to expand their business.

What role PE investors play and how they back businesses is best explained by BaltCap’s portfolio companies themselves. This time, we chatted with Viktorija Meikšāne, the CEO of Coffee Address—the leading coffee company specialising in office and on-the-go coffee in the Baltics. Viktorija shared her thoughts on the nature of PE financing, its most significant advantages, as well as how to prepare for financing.

  • Company: Coffee Address
  • Strategy: Buyout
  • In BaltCap’s portfolio: since 2017

1. What are the main advantages of PE funding from a company perspective?

If the company is 100% owned by BaltCap, it is a seal of quality and this in itself opens numerous new opportunities for businesses A recent example – the fact that we are owned by BaltCap helped Coffee Address in the bond-issuing process at Nasdaq Baltic. BaltCap’s network of local and international advisors and experts is a great asset. PE is called smart money for a reason. You get both the funds and the knowledge to develop the company to a new level. BaltCap takes an active role as a shareholder in the company’s Supervisory Board and steers with strategic goal setting. They helped us introduce a solid corporate governance structure that business partners appreciate.
“The fact that BaltCap is a shareholder in the company is a seal of quality.”

“The fact that BaltCap is a shareholder in the company is a seal of quality.”

2. What does knowledge really mean for a portfolio company?

BaltCap team has invested in 100+ companies across different industries, has absorbed market experience practices for more than 20 years, has seen the most diverse situations, and therefore gives priceless advice. With extensive investment experience, BaltCap has provided a valuable viewpoint that assists with seeing the bigger picture and gaining insight into the nuances of any possible case.

3. Which companies are best suited for PE financing, and how should a company prepare itself for financing?

The first is a company’s ambition, and the second is transparent and solid accounting processes. Market knowledge and an outstanding management team also make a difference. The company needs a concrete vision for growth and a clear plan to succeed. But most importantly—be prepared to be able to tell your story!
When it comes to preparation, a company needs to have transparent and well-organised finances. Ideally, accounting processes are automated. Data can easily and quickly be retrieved and navigated to be presented to the shareholders.