Estonian venture capitalists acquire two Latvian companies in one week, eye more investments

  • 2007-04-04
  • By TBT staff

ENERGETIC INVESTMENTS: Keith Cullen (right) will take the helm from Janis Kols (center) at LEC and help position the company to profit from the enormous energy infrastructure projects Latvia will see in upcoming years.

RIGA - Alta Capital, an Estonian private equity firm, announced last week that it had acquired a Latvian construction company and biofuel developer and said it was shopping around within the country's food industry for more possible takeovers. Alta Capital stated on March 28 in a press release that it had acquired Latvijas Energoceltnieks (LEC), purchasing 100 percent of the firm's shares from owner Janis Kols. The price of the deal was not disclosed.

The following day the company announced that it acquired 100 percent of Graanul Invest, the largest biofuel development company in the Baltics.
Both acquisitions underscore an increasingly aggressive expansion policy as the venture capital firm positions itself to profit from the Baltics' rapid economic development, particularly in the energy sector.
Alta Capital said it was planning significant changes in LEC and that there were hopes that LEC would begin developing new real estate projects in the near future.

The firm also said it had appointed Keith Cullen as managing director. In its statement, Alta Capital said Cullen has 40 years experience in the energy construction industry.
"In the next five years LEC's turnover can increase 3 - 4 times," Cullen told a news conference, adding that projects abroad, including in Estonia and Lithuania, would help achieve that goal.
Kols founded LEC in 1992. Since then it has grown to become one of the largest construction companies in Latvia. In 2006 the company carried out projects worth some 32.5 million lats (46.4 million euros), but as the company stressed, future development depends on expanding to foreign markets, and this can't be accomplished without a foreign partner.
"This is a well thought-out, enduring and strategic decision," said Kols. "It is also a tough decision because I have been present during the development of the company from the very beginning."

Kols said he would continue working at LEC as chairman of the supervisory board.
Alta Capital bought the stake in Graanul Invest from Vicron Investment Group and issued bonds to the tune of 141 million kroons (9 million euros) for the purchase, the Baltic News Service reported.
Graanul Invest, a company established in 2003, has granule making plants in Estonia, Latvia and Lithuania. The company's annual granule output is approximatly 200,000 tons a year.
According to the company's 2005 financials, Graanul Invest's earnings amounted to 11.7 million kroons in 2005, while sales amounted to 133 million kroons.

Alta Capital is no stranger to the Latvian market. In 2004 it acquired the Lauma textile and lingerie producer, and in an interview with Diena on April 2 the firm's president, Indrek Rahumaa, said it was eyeing the local food industry.
Rahumaa said that Alta was in talks with Rigas Piensaimnieks, a dairy. "I can say that we are interested in strong-positioned brands of the food industry," he said.
"The food industry for us means chocolate and dairy products, and maybe some other things you can see in stores. But they should be strong brands with strong positions to compete in the region," he said.