On November 1, 2016, CEELM reported that ZGI Capital has invested EUR 700,000 in Latvian FinTech company Mobilly. Rudolfs Krese, Investment Director at ZGI Capital agreed to provide more details on the deal.
CEELM: Mobilly announced that it attracted an "investment of EUR 1.1 million, including EUR 700,000 from ZGI-3." Who were the other investors? Was it a joint investment coordinated beforehand or did it happen separately? If coordinated, who led the process, and how did the coordination between the two investors go?
M.Z.: The fund's strategy is to invest into development and/or cash flow generating commercial properties across the three Baltic capitals — Vilnius, Riga, and Tallinn. This project is part of the fund’s long-term strategy.
CEELM: How does the investment in Mobilly fit into ZGI Capital's overall investment portfolio? Does the investment come with strings attached, and what are they?
R.K: ZGI fund has a well-diversified portfolio of 23 companies. Mobilly represents IT, more specifically FinTech, and has good growth potential. The company is already well established in the local market, [and this] new investment is targeted to facilitate further product development and expansion to foreign markets.
CEELM: The Fort law firm reported that it "advised venture capital fund ZGI-3 in all phases of the transaction, including conducting due diligence, as well as drafting and negotiating all the investment documents." To what extent were you involved in the active negotiating process?
R.K: Main negotiation was done by the ZGI team with Fort providing valuable assistance regarding legal issues (including legal and tax DD). Fort drafted all the investment documents and participated in the negotiations.
CEELM: How often do you use external legal services in your daily work and what is your experience managing external counsel? How do you usually choose them?
R.K: As a rule we use external legal counsel for all our investment cases. Considering that the complexity of investment cases differ, we use Fort for the most complicated cases. For less complicated cases (or if there is a potential conflict of interest) we use other providers of legal services with whom we have established working relationship. In case we need some specific experience, we do tendering.
CEELM: Have you worked with Fort in the past? Why did you retain them for this particular deal?
R.K: We have worked with Fort in many cases. We like to work with them as their competence, work accuracy, and work ethics is on a very high level. The Mobilly case in particular required a high level of IP and regulation (FKTK) knowledge. Fort had the necessary competence for the job.