INVL pension funds invest EUR 10 million in apartment building renovation in Lithuania

INVL pension funds are investing EUR 10.3 million in the SB Modernization Fund established by Šiaulių Bankas, whose resources will be used to renovate 600 apartment buildings in Lithuania. It is the first investment in housing renovation by Lithuanian pension funds that will boost the country’s energy independence.

The SB Modernization Fund raised a total of EUR 275 million in loans from the European Investment Bank (EIB), the Council of Europe Development Bank, the Nordic Investment Bank (NIB), Swedbank and INVL pension funds. It also includes funding from the Lithuanian state and the European Structural and Investment Fund (ESIF).

“We are pleased that this investment by INVL pension funds which meets the criteria of sustainability will not only help reduce reliance on the use of imported natural gas but will also create new jobs and improve the quality of life for the owners of the renovated apartment buildings. We have the biggest team of investment professionals in Lithuania and we very closely analysed the behaviour of clients who took apartment renovation loans in Lithuania in the past and the international experience. Considering that renovated housing grows in value and when it is sold the loan passes to the new buyer we concluded that the costs of the risk would not be big”, said Vaidotas Rūkas, the head of INVL’s investment management division.

He said INVL pension funds invested money in the SB Modernization Fund by redeeming 2046 convertible bonds. “We are the pension funds that are most active on the local market and can carry out complex transactions that create value for our clients. That is why we plan similar investments in the future as well,” the head of INVL’s investment management division noted.

Figures from Lithuania’s  Environmental Projects Management Agency (EPVA) show that only 10% of apartment buildings in the country have been renovated at present.

“The investors who have come together in the newly established fund are ready to accelerate the process of renovating apartment buildings. We have set ourselves the ambitious goal of financing the renovation of more than 500 such buildings, which would ease the burden of rising heating costs for the people who live in them and improve their quality of life. Rapid renovation of apartment buildings would reduce Lithuania’s dependence on fossil fuels and contribute notably to the fight against climate change by cutting carbon dioxide emissions,” said Vytautas Sinius, the CEO of Šiaulių Bankas.

Sinius noted that the new fund is a unique financial instrument designed to attract private funding for renovation not only in Lithuania but also in other parts of Europe. The structure of the fund allows enables significant synergies – raising private capital multiplies the state funds allocated for funding renovation projects by up to five times.

It is planned that the fund will finance the renovation of 600 older apartment buildings, improving living conditions for 16,000 households. The project is expected to yield savings of 200 gigawatt hours (GWh) of heat energy and significantly help fight climate change by saving some 50,000 tonnes of carbon dioxide annually.

Cobalt, one of Lithuania’s biggest law firms, advised INVL pension funds in the transaction.

About INVL Asset Management

INVL Asset Management, one of the leading asset management companies in Lithuania, is part of the Invalda INVL Group. The group’s companies manage pension and mutual funds, individual portfolios, private equity and other alternative investments. More than 260,000 clients in Lithuania and Latvia as well as international investors have entrusted the group’s companies with the management of more than EUR 1.6 billion in assets. Invalda INVL, operating since 1991, has nearly 30 years of solid experience in managing private equity assets and building leading market players in their respective fields in the Baltic states and the CEE region.