Capital at Home: What Will Finance Growth in the Baltic States?

Vita Liberte, Managing Partner at BDO Latvia, Attorney-at-Law

Capital to support the growth of Baltic companies is available right here in the region. In 2025, EUR 2.1 billion was raised on the Baltic stock exchanges, with 60 new bond issues completed. At the same time, companies from around the world are competing for the capital available in the Baltics. So having access to capital is not enough – companies must be able to present investors with a clear and compelling investment story. 

Investors need to understand how the financing raised will translate into higher revenue, greater profitability or increased export volumes, what the key risks are, and how those risks will be managed. Plans to expand production, acquire a company or enter a new market must be backed by data, not ambition alone. 

Local Capital Needs a Broader Range of Investment Opportunities
Interest in investing is growing among the Latvian public. Data published by Swedbank in 2025 show that over the past five years, the number of private investors in Latvia has increased fivefold, while the value of securities portfolios has quadrupled. Yet almost half of those surveyed would still feel uncertain about investing in financial instruments. This suggests that growing interest alone is not enough – broader participation will require greater trust and investment opportunities that are easy to understand. 

At the same time, local investment opportunities remain limited. In 2025, there were no IPOs on the Riga Stock Exchange, despite bond issuance reaching a historic high. In other words, investors have more opportunities to lend to companies, but still relatively few opportunities to become their owners. Unless the supply of equities grows, increasing investor interest will continue to flow into foreign markets.

Capital Raising Starts Within the Company
For a company to be ready for the capital markets, it needs high-quality financial statements, sound internal controls and reliable management forecasts. Investors assess not only a company’s growth plans, but also the quality of its governance, its cash flow and its ability to communicate its results clearly and regularly.
The work does not end once capital has been raised. Trust is built through transparent communication about achievements, deviations from plans and setbacks. The Baltic experience shows that strong interest from private investors alone does not guarantee long-term success – the protection of minority shareholder rights and clearly defined exit terms are equally important.

Pension Capital – Significant, but Not Automatically Available
At the end of 2025, the assets of Latvia’s second-pillar pension system reached EUR 9.979 billion. Even one percent of this amount represents approximately EUR 100 million, while five percent amounts to nearly EUR 499 million. This illustrates the scale of the capital pool, but it does not mean that these funds can simply be “channelled” into local companies.

Pension fund managers need sufficiently large, high-quality transactions that fit their risk profiles. Professionally managed funds investing at a Baltic scale could pool investments across several companies, making them more suitable for institutional investors. However, each transaction must offer clear potential for returns after costs, demonstrate sound governance, and meet portfolio risk requirements.

Investing Should Be Simple
A simple tax framework is also essential if more private investors are to participate in the local capital market. In Latvia, the investment account regime already allows tax payments to be deferred until the amount withdrawn from the account exceeds the amount contributed. The next step should be simpler tax reporting and a lower administrative burden.

Raising local capital does not begin with quotas or calls to “invest in our own”. It begins with companies that can offer credible, transparent, and investor-friendly investment opportunities. The more high-quality opportunities there are, the greater the share of capital accumulated in the Baltics that can be directed towards financing the growth of the region itself.