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EBRD supports competition in Estonian pensions market
LHV AM equity investment in line with new EBRD strategy
To support competition in the Estonian pensions market, the EBRD is paying EEK 16.5 million
(€1.1 million) for a 34.88 per cent share in Lõhmus, Haavel & Viisemann Asset Management (LHV AM), a private pension fund management company currently owned by investment bank Lõhmus, Haavel & Viisemann. The investment reflects the EBRD's new strategy for Estonia, published for the first time today on www.ebrd.com, to invest more in non-bank financial institutions.
The EBRD's stake will boost LHV AM's expansion in the mandatory pensions market recently launched in Estonia by supporting two new pension funds issued by company that involve compulsory payments for all Estonian employees born in or after 1983, with voluntary payments for employees born between 1942 and 1982.
Jonathan Woollett, director of non-bank financial institutions at the EBRD, said the Bank's involvement will enable LHV AM to contribute to the development of a diverse and competitive pensions market in Estonia. Reforms already taking place in the pensions market are crucial, not only for the social welfare of Estonians when they retire; their development will have a more immediate and significant impact on the wider economy as well, he added.
Rain Lõhmus, Partner at Lõhmus, Haavel & Viisemann, said he highly values the EBRD´s experience in pension funds in other central and eastern European countries. This will allow investors to diversify their investments beyond Estonia and track worldwide indices. The participation of the EBRD is going to enhance the investment strategy in the eyes of pension fund investors. As a result, it has a positive effect on the credibility of the whole pensions reform in Estonia," Lõhmus added.
To date the EBRD has invested in excess of €250 million in non-bank financial institutions related businesses across the region. In addition to projects in non-bank financial institutions, the EBRD's revised strategy for Estonia indicates that the Bank will particularly support infrastructure enterprises through their more advanced stages of transition, provide financing to larger industrial and service enterprises, and for the development of small businesses, with a particular emphasis towards the country's less developed regions.
Having invested around €352 million in Estonia itself, for projects with a total value of €710 million, the EBRD has played a pivotal role in promoting the country's reform over the past decade. The new strategy aims to help attract additional foreign investment, which is crucial for economic growth and sustained development.
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