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The European Bank for Reconstruction and Development (EBRD) is acquiring a minority stake in Eco Baltia JSC, a leading provider of waste treatment in Latvia and the Baltic states. The Bank’s investment of €10 million will be used to finance construction of a mechanical biological treatment plant for household waste.

The plant will be the first of its kind in the region, focusing on extraction of recyclable materials from household waste. In Latvia, nearly 90 per cent of municipal waste is being landfilled and the new plant will play an important role in strengthening an approach to waste management in line with recent European legislation.

Eco Baltia was set up in 2002 and operates in waste recovery, waste collection, polymer recycling and the sorting and trading of recyclables. It is the largest waste management operator in the Baltic region with strong growth potential due to a stable macroeconomic environment and growing awareness of environmental concerns.

Matt Hyyrynen, EBRD Head of Office for the Baltics, said: “We are very proud to sign this investment because we believe in Eco Baltia and the company’s activities and strategic direction. By becoming a shareholder, the EBRD aims to make a strong company even stronger for the benefit of the environment and the economy. Companies are increasingly realising the vast potential of recycling and for this they need waste management operators like Eco Baltia.”

Māris Simanovičs, Chairman of the Board of Eco Baltia, added: “I believe that the EBRD is a valuable partner for Latvian companies operating or planning to operate on an international level. The EBRD’s contribution of financial resources, experience and high corporate governance standards is an essential addition to bring our potential to fruition. The EBRD’s decision to invest in our company after thorough examination is an endorsement of Eco Baltia and boost for our future development.”

The EBRD has been investing in Latvia since the country’s independence in 1991. To date, the Bank has invested more than €620 million in some 75 projects throughout all sectors of the economy. In recent years, the EBRD has focused on the support of small and medium-sized enterprises and investment in promising innovative enterprises through direct acquisition of equity or via funds.

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Environment management Group “Eco Baltia grupa” achieved turnover of MEUR 45.5 in 2015, which is an increase by 1.4% compared to 2014. Compared to 2014, the Group’s profit has tripled reaching MEUR 2.78 in 2015. The financial results show the efficiency and stable growth of the Group companies. Māris Simanovičs, “Eco Baltia grupa” Chairman of the Board: “We were working purposefully in 2015 to make the Eco Baltia Group companies more efficient and to increase the competition in the waste management industry by retaining stable leading position and offering our clients high-quality services. Our largest investment of 2015 was the waste sorting facility in Liepāja Region, where we invested MEUR 3.25. The facility has had, without doubt, a positive socially economic impact in the region, currently employing 24 employees, which is more than we had planned. This year we have also worked to ensure long-term development, creating new products and services for the market and improving the logistics system and quality of services. Our goal is to continue implementing modern, technologically developed waste management, sorting and recycling system that is as environmentally friendly as possible and competitive on the European and global level.”

The companies engaged in production of recycled materials AS “Pet Baltija” and SIA “Nordic Plast” continued developing in 2015 by increasing their production capacity and developing new products. The companies are leading processors of polymers in the Baltics exporting almost 100% of the produced goods mainly to other member states of the European Union. This year it is planned to implement new and more efficient technologies to increase the production capacity retaining the quality of products and implementing innovative products in the market. Last year the producer of recycled materials “PET Baltija” achieved turnover of EUR 18,355,991 and recycled 28,480 tonnes PET bottles. SIA “Nordic Plast”, in its turn, made comparatively small investments to ensure the production capacity in 2015. The company has produced 8,777 tonnes of ready-made materials, 90% of which was exported to other European countries and the company’s net sales amounted to EUR 9,130,159.

SIA “Eco Baltia vide” continued providing environment management services in the Rīga, Ādaži, Salaspils, Babīte, Mārupe, Talsi, Engure, Jaunpils, Kandava, Mērsrags, Roja and Dundaga Municipalities in 2016. Net sales of SIA “Eco Baltia vide” in 2015 amounted to EUR 7,416,530. The company generated profit of EUR 342,571. Last year, SIA “Eco Baltia vide” established the first waste recycled waste acceptance point in Rīga – on Getliņu Street 5, Rumbula, Stopiņu Municipality – where all inhabitants of Rīga and nearby region can deliver their recycled waste.

The environment management company PSIA “Jumis” provides environment management services in Sigulda and the nearby region. Net sales of the company was EUR 635,392 in 2015. Last year the company developed new projects and services. The company has established a network of eight recycled waste acceptance points in Sigulda. There are underground containers for sorting glass and plastic at each point. The project was implemented using the financing from the Cohesion Fund of the European Union. The total cost of the project was EUR 48,991, out of which EUR 19,544 was cofinanced by the Cohesion Fund.

The environment management company in the Liepāja Region SIA “Eko Kurzeme” implemented the largest investment project – construction of household waste sorting facility. By investing MEUR 3.25, one of the most modern facilities of this type has been established in the Baltics. The facility allows sorting up to 35,000 tonnes of household waste per year. This ensures the development potential of the facility in future and will allow reducing the amount of waste buried in the landfill. SIA “Eko Kurzeme” concluded the year 2015 with net sales of EUR 2,780,335 and the profit of EUR 409,784.

“Eco Baltia grupa” companies employ 600 employees. Last year, the Group companies paid taxes of MEUR 5.2. The Group companies service more than 46,000 clients in Latvia and abroad. “Eco Baltia grupa” companies are leaders in Latvia providing full waste management cycle – starting with collecting and sorting of waste and ending with recycling and exports of recycled materials.

INVL Baltic Sea Growth Fund (“the Fund”), the largest private equity investment fund in the Baltic region, has completed the acquisition of a controlling stake (52.81%) in Eco Baltia, the largest environmental management group for plastic recycling and waste collection in the Baltics.

The deal sees the European Bank for Reconstruction and Development (“EBRD”) retain their 30.51% stake in Eco Baltia and Maris Simanovičs, Chairman of the Management board of SIA Eco Baltia grupa, retain a 16.68% stake (via Penvi Investment Ltd). Both parties have subsequently entered into a shareholders’ agreement with the Fund.

Vytautas Plunksnis, Partner at the Fund, commented: “We plan to invest significant capital into Eco Baltia’s recycling capabilities and establish it as a clear market leader of the circular economy in the Baltic region, through the delivery of high quality and sustainable recycling services. The world we live in is now using more resources than the planet can produce and so reusing what we have in a sustainable manner is of critical importance. We intend to focus on food grade recycled plastics (rPET) capacities expansion that will ultimately contribute to a reduction in carbon footprint and promote environmental sustainability.”

In 2019, Eco Baltia’s group revenues increased by 9% to €70.62 million, with more than 60% of its revenues coming from the recycling sector alone. The group employs more than 800 people and its largest subsidiaries are PET Baltia, Eco Baltia Vide, Nordic Plast and Latvijas Zalais Punkts respectively.

Two Partners at the INVL Baltic Sea Growth Fund, Vytautas Plunksnis and Deimantė Korsakaitė will join Eco Baltia’s supervisory board together with an independent member and waste management expert, Jurgita Petrauskienė. The EBRD will be represented by Peter Hjelt and Maris Simanovičs by Gints Pucens.

Deimantė Korsakaitė, Executive Partner at the Fund, commented: “Investing in proven, leading Baltic companies which clearly demonstrate further growth potential is one of the Fund’s core investment themes. Eco Baltia sits at the forefront of the circular economy for the Baltic region and therefore meets this criterion. This deal represents the third company to join our portfolio and will allow us to capitalise on the growing importance of environmental concerns by focusing on both recycling and lifestyle sustainability enhancement measures.”

Ian Brown, Head of Baltics at the EBRD, commented: “We are excited to support a leading private equity fund in the Baltics and growing Eco Baltia as we seek to create real value in an ever more important circular economy model.”

Maris Simanovičs, Chairman of the Management board of SIA Eco Baltia grupa, commented: “We are pleased to attract such a major Baltic investor like the INVL Baltic Sea Growth Fund. With this new direction for the company, we look forward to a growth phase that will doubtless open up fresh opportunities and key markets globally for the group. This internationalisation is particularly important for the waste recycling industry in order to partner and work with major international companies and to further expand our Eco Baltia network worldwide.”

INVL Baltic Sea Growth Fund

INVL Baltic Sea Growth Fund with its total size of €165mn is the largest 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 two companies within the healthcare and civil engineering sectors.

The Fund is managed by one of Lithuania’s leading asset management companies INVL Asset Management, which is part of the Invalda INVL group.

INVL Asset Management is part of the Invalda INVL, one of the leading asset management groups in the Baltic region. The group’s companies manage pension and mutual funds, alternative investments, individual portfolios, private equity assets, and other financial instruments.

Over 200,000 clients in Lithuania and Latvia and international investors at the end of 2019 have entrusted the group with more than €1bn of assets under management. Active since 1991 and with a solid track record, Invalda INVL boasts 28 years’ worth of experience in managing private equity assets in the Baltic countries and CEE landscape while developing companies into best-in-class market leaders.

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