INVL Baltic Sea Growth Fund (https://bsgf.invl.com), the largest private equity investment fund in Baltic States, is investing up to €30 million into Grigeo cardboard business, a leading paper and wood industry company for the Baltic region.
Under this agreement, up to 49.99% of Grigeo Investicijų Valdymas shares, a company owned by Grigeo, will be acquired by BSGF Salvus, a subsidiary of the fund, in two phases. The transaction is to be completed upon the fulfillment of contractual terms and conditions, subject to the permission issued by the Competition Council.
In the first phase, BSGF Salvus, a subsidiary of the INVL Baltic Sea Growth Fund, will acquire a new share issue for €15 million, thereby acquiring 33.33% of Grigeo Investicijų Valdymas, comprising Grigeo Group cardboard companies Grigeo Klaipėda, Grigeo Recycling, Grigeo Recycling (Latvia) and Mena Pak (Ukraine), as well as taking over the shares of Grigeo Packaging. In the second phase of this transaction, an additional investment of €15 million will increase the stake of Grigeo Investicijų Valdymas, owned by BSGF Salvus, to 49.99% for INVL Baltic Sea Growth Fund.
Gintautas Pangonis, President of Grigeo, commented:
“Investor attraction marks a new stage in our development and actively supports our step-by-step approach to strengthening our position in the Baltic region. We are confident in the growing demand for cardboard and its products and therefore plan to increase our production capacity by three times over the next five years. This strategy also includes the investment of €150 million in a new paper production plant of secondary raw material. We hope that the INVL Baltic Sea Growth Fund & investment and team expertise will contribute to both the company's growth and a stronger position in foreign markets.”
According to Mr. Pangonis, the construction of the new factory is estimated to be financed with funds accumulated by Grigeo companies and also by investments of the fund and loans granted by financial institutions. The new paper mill is likely to be established in Lithuania or one of the countries where Grigeo owned companies operate. This project is expected to create up to 200 new jobs.
Darius Šulnis, Managing Partner at INVL Baltic Sea Growth Fund, commented:
"Rapid growth of the cardboard industry in the Baltic Sea region, the development of online commerce with global markets and a willingness of consumers to choose environmentally friendly packaging have all contributed to an ever-increasing need for paper and cardboard, mainly from secondary raw materials. INVL Baltic Sea Growth Fund is investing because our firm belief in the outlook for this industry. We have a market leading track record of investment in this sector with a strong team that is experienced and capable of implementing large-scale, complex projects of this ilk. These investments should further strengthen this position of competitive advantage.”
According to Mr. Šulnis, this transaction represents the INVL Baltic Sea Growth Fund strategy to realize an attractive return on investment by financing and developing already competitive, high value-added businesses that are market leaders for the region.
In 2018, Grigeo’s cardboard business revenues increased by 7.8% to €72 million. Grigeo has already created c.400 jobs via their cardboard business. Other Grigeo Group businesses, namely its tissue paper production as well as its fiberboard production at Grigeo Baltwood are not related to this transaction and will continue to work as before. In 2018, the revenues of these businesses amounted to €70.5 million.