Author: ecobalt

In order to expand its activities and continue its development, the environmental management company SIA Eco Baltia vide plans to acquire the road and street maintenance company SIA Pilsētas Eko Serviss. The purchase agreement concluded by the parties, the execution of which requires a merger approval of the Competition Council, provides for the acquisition of 100% in the SIA Pilsētas Eko Serviss, SIA PES serviss and SIA B 124. The documents necessary to complete the transaction have been prepared for submission to the Competition Council. The process is expected to be concluded later this year.

Upon conclusion of the transaction, Pilsētas Eko Serviss will become part of AS Eco Baltia group’s companies in the environmental management segment specialising in street and road maintenance. At the same time, it should be stressed that no changes are planned to the existing cooperation agreements and arrangements for both parties’ clients, partners and employees. If the merger is cleared by the Competition Council by then, the acquisition will be completed at the end of December 2022.

“The last two years of Eco Baltia’s environmental management segment’s activities should be characterised by dynamic growth. During this period, we have not only implemented internal consolidation, but also acquired several companies within the framework of the segment to increase our competitiveness, find new opportunities and become a leader in the Baltics. While our subsidiary Ecoservice is one of the market leaders in road and street maintenance in Lithuania, in Latvia we are planning to develop this service more rapidly with the acquisition of Pilsētas Eko Serviss, promoting synergies also with our Lithuanian subsidiary. Pilsētas Eko Serviss has a very extensive and successful experience in the sector, the necessary technical equipment and a professional team of employees, which creates a very good platform for further growth already as being a part of the environmental management segment of Eco Baltia”, says Jānis Aizbalts, Chairman of the Board of Eco Baltia vide and Head of the Environmental Management at Eco Baltia.

Pilsētas Eko Serviss has been on the market for almost 20 years, and we are pleased to call ourselves one of the leading providers of street and road maintenance services in the Riga and the Greater Riga region. We are happy that the company will be able to continue its development and make new investments in the future, but already as a subsidiary of Eco Baltia vide. For our existing clients and employees, these changes will also be beneficial, because being part of a larger group will allow us to plan our investments in future development on a broader scale and with the involvement of the expertise of the entire Eco Baltia, says Alvis Krauklis, Member of the Board and co-owner of Pilsētas Eko Serviss.

Vytautas Plunksnis, Partner at INVL Baltic Sea Growth Fund and Chairman of the Supervisory Board of Eco Baltia: Our strategic objective to develop Eco Baltia as a strong regional leader focusing on sustainable environmental services and recycling is already delivering results – competitiveness and efficiency of our companies are growing, as are consolidated revenue. By expanding our offer in the environmental management segment, we create new value both for customers, employees and investors.

Financing of the transaction is planned by attracting bank funding, and the parties have agreed not to disclose the value of the transaction publicly.

Pilsētas Eko Serviss offers such services as street and road maintenance, water drainage system maintenance and repair works, as well as equipment rental. The company was founded in 2003, and now it is owned by several individuals. In 2021, revenue of Pilsētas Eko Serviss reached 5.7 million euro. The company employs around 80 people.

PET Baltija, one of the largest PolyEthylene Terephthalate (“PET”) recyclers in Northern Europe, has completed the acquisition of 100% of shares of a leading Czech fibre producer TESIL Fibres, a spin-off of SILON. This transaction is set to increase PET Baltija’s annual turnover by more than 50% and ensure the production of higher value-added products by the company.

“This transaction puts PET Baltija on the map as a key international player in the PET recycling sector. Up to this point, we were the region’s leading player in terms of recycled PET production but now our portfolio will also include the production of a finished product – PET fibre. The growth potential of TESIL Fibres as well as its close-knit and professional team serve as an excellent foundation to further the development of the company and make smart use of the synergies between the two businesses. The vertical integration of PET Baltija and TESIL Fibres and a closer cooperation between the two will help us to create more value for our employees, customers and partners,” said Salvis Lapiņš, Chairman of the Board at PET Baltija.

TESIL Fibres is the Czech Republic’s largest producer of PET fibre with 150 employees and an annual capacity of 33 000 tonnes, reaching revenues of €27 million last year. Known for its high production quality standards, the company acts as a primary fibre supplier in the European market for the automotive, hygiene, textile and furniture segments.

Deimantė Korsakaitė, Executive Partner at INVL Baltic Sea Growth Fund and Chairman of the Supervisory Board at PET Baltija, commented: “PET Baltija has more than doubled its revenues since our investment. In parallel to further organic growth and investments in production expansion set to more than triple the existing food-grade rPET capacities, PET Baltija is also pursuing a path of vertical integration, in line with the overall strategy. Following the acquisition, the combined revenues of PET Baltija are set to exceed €100 million, solidifying it as an international player and further strengthening its contribution towards sustainable development.”

The financing for the transaction, which marks one of the largest investments made by Latvian companies in the Czech Republic to date, was granted by Luminor Bank, the third largest provider of financial services in the Baltic States.

Ilze Zoltnere, Head of Corporate Banking at Luminor in Latvia, added: “Even in this difficult geopolitical environment, Eco Baltia group companies are able to show steady growth and continue to develop, including through well-considered investments focused on expansion and new markets. We are pleased to support the company’s objectives by financing a transaction of a significant scale, which is a strategic step to strengthen the presence in the international market and continue sustainable growth.”

Legal experts from Sorainen acted as advisors for this transaction. Mantas Petkevičius, Partner at Sorainen, concluded: “We are delighted to see PET Baltija, the Baltic market leader and one of the largest PET recyclers in Northern Europe, expanding and becoming a truly international vertically integrated market player. We hope that the expansion of the region’s champions into international markets will become a continuous trend.”

PET Baltija, one of the largest PolyEthylene Terephthalate (“PET”) recyclers in Northern Europe, today announces an agreement to acquire a leading Czech fibre producer Tesil Fibres s.r.o, a spin-off of SILON s.r.o. Once closed, this transaction will become one of the largest investments by a Latvian company in the Czech Republic to date.

This vertical integration transaction will subsequently increase PET Baltija’s current revenues by more than 50% while also making it an international company. For SILON, the transaction will enable it to fully focus on both the production and development of the highest quality polyolefin-based performance compounds.

Fibre production has been part of the traditional operations in Planá, Czech Republic dating back to 1966, and being integral part of SILON s.r.o. The operations spun-off to Tesil Fibres encompass country-leading annual staple fibre production capacities of 33 000 tonnes and c. 150 employees.

Tesil Fibres is a primary supplier to the European market, covering industries and sectors that include automotive, hygienic, textile and furniture. It is also well known for its high quality standards and last year its fibre division recorded sales of €27million.

Salvis Lapiņš, Chairman of the Board at PET Baltija, commented:

“This deal will really put PET Baltija on a map as a key international player for the sector. We recognise and are excited by Tesil Fibres’ impressive high growth potential and its dedicated team of professionals. Working closely with the team and other key stakeholders, we plan to develop the company further, accelerating its growth and creating real value for all those involved. By ensuring the supply of best-in-class recycled PET materials, we will look to significantly contribute to the growth of the Tesil Fibres business and add greater product differentiation to it. It is also important to mention that through these developments, the overall volume of recycled PET will also increase.”

Deimantė Korsakaitė, Executive Partner at INVL Baltic Sea Growth Fund and Chairman of the Supervisory Board at PET Baltija, added:

“This agreement to acquire reinforces INVL Baltic Sea Growth Fund’s goal to significantly expand PET Baltija through both organic growth and bolt-on acquisition strategies. Since our initial investment, PET Baltija alone has more than doubled its revenue and is on track to finalise an organic growth expansion project that will more than triple its food-grade PET production capabilities. This deal will cement the company as a truly international vertically integrated market player that is committed to sustainability and tackling environmental issues. This represents a significant development and leads to become a €100million+ revenue company.”

Šuchrat Saidov, CEO at SILON s.r.o. concluded:

“Following a series of consultations and extensive market research, we decided that the best route to success for the fibre division would be to identify a respected strategic partner who can further grow and develop it. We are delighted to report that we have found a solution which, we believe, will be the best possible outcome for fibre production in Planá. The SILON Group will now focus all its growth and development efforts towards compounding business.”

Both, SILON and PET Batlija emphasise that part of this agreement is a detailed handover plan, primarily targeting and ensuring that there will be no changes to the current service offering that highly valued partners, customers, suppliers, employees or other key stakeholders receive.

PET Baltija

(https://www.petbaltija.lv/en/)
PET Baltija is one of the largest PET recyclers in Northern Europe and the largest PET recycler in the Baltic region operating in Latvia. It belongs to Eco Baltia, the largest environmental and waste management group in the Baltics. Eco Baltia provides full-cycle waste management solutions from waste collection and sorting to secondary raw material logistics, wholesale and raw material processing. PET Baltija implements the recycling of used polyethene terephthalate (PET) bottles and is the industry leader on the Baltic scale. The recycled product portfolio includes high-quality PET flakes and granules (including food packaging), of which nearly 100% are exported.

In 2021, the Eco Baltia group pro-forma revenues reached c. €150mn, doubling from €75mn in 2020, bolstered in part by an acquisition of a leading Lithuanian waste manager Ecoservice in August 2021. The Group employs over 2 000 people in Latvia and Lithuania with leading companies in the existing portfolio including PET Baltija, Eco Baltia Vide, Ecoservice, Latvijas Zalais punkts and Nordic Plast.

Shareholders of Eco Baltia are private equity fund INVL Baltic Sea Growth Fund (52.81%), the European Bank for the Reconstruction and Development (30.51%) and management of the company (16.68%).

INVL Baltic Sea Growth Fund
(https://bsgf.invl.com/fund-overview/)

INVL Baltic Sea Growth Fund with its total size of €165mn is the leading private equity fund in the Baltics with the European Investment Fund (“EIF”) acting as its anchor investor.

The EIF has committed €30mn with the support of the European Fund for Strategic Investments, a key element of the Investment Plan for Europe (or the ‘Junker Plan’), as well as allocating resources from the Baltic Innovation Fund, the “fund of funds” initiative developed in cooperation with the governments of Lithuania, Latvia and Estonia. This aims to increase capital investment in high growth potential small and medium-sized enterprises in the Baltic States.

The Fund seeks to assemble a diversified portfolio of companies, targeting majority or significant minority stake deals and writing tickets of €10mn to €30mn, that showcase high growth potential and the ability to compete on a truly global basis.

The Fund is focused on the Baltic States and the neighbouring regions of Poland, Scandinavia and Central Europe specifically. The Fund so far has invested in six companies within the healthcare, civil engineering, environment management (plastic recycling and waste management), veterinary services and cosmetics and hygiene products manufacturing sectors.

INVL Asset Management
(https://www.invl.com/en/ )

The Fund is managed by the leading in the Baltic region investment management and life insurance group Invalda INVL. The Group’s companies manage pension, mutual funds and life insurance commitments as well as individual portfolios, private equity and other alternative investment products. More than 290,000 clients across Lithuania, Latvia and Estonia plus international investors have entrusted the Group’s companies with the management of over EUR 1.7 billion in assets. The Group has a strong track record managing private equity assets and building leading market players in the Baltic countries and the Central and Eastern European region for over 30 years.

SILON s.r.o.
(https://www.silon.eu/)

SILON started its activities in the 1950s with the production of polyamide filament yarn and has constantly geared its business model towards innovation and clients. After the extension of the product portfolio to Technical Compounds, the re-orientation of the fibre business to technical application and the introduction of short-spinning fibre technology using postconsumer PET – flakes as raw material, the name SILON always stood for quality, safety and reliability.

SILON s.r.o. achieved in 2021 total revenues of 150 mio EUR and employees currently more than 400 people in Plana nad Luznici, Czech Republic. Today, SILON designs, produces and sells polyolefin-based performance compounds for applications in construction, energy, hygienic and automotive industries, as well as for general industrial applications.