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INVL Baltic Sea Growth Fund invests up to EUR30m in cardboard manufacturing business managed by Grigeo AB

INVL Baltic Sea Growth Fund is investing up to EUR30 million into Grigeo cardboard business, a leading paper and wood industry company for the Baltic region. 

Under this agreement, up to 49.99 per cent 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 EUR15 million, thereby acquiring 33.33 per cent 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 EUR15 million will increase the stake of Grigeo Investicijų Valdymas, owned by BSGF Salvus, to 49.99 per cent for INVL Baltic Sea Growth Fund. 

Gintautas Pangonis, President of Grigeo, says: “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 EUR150 million in a new paper production plant of secondary raw material. We hope that the INVL Baltic Sea Growth Fund’s investment and team expertise will contribute to both the company’s growth and a stronger position in foreign markets.” 

According to 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, says: “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 believe 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 Šulnis, this transaction represents the INVL Baltic Sea Growth Fund strategy to realise 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 per cent to EUR72 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 fibreboard 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 EUR70.5 million. 

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