PET Baltija, one of the largest PET recyclers in Northern Europe, agreed to acquire a leading Czech fibre producer Tesil Fibres s.r.o, a spin-off of Silon s.r.o. Vertical integration transaction will increase PET Baltija’s revenues by more than 50% and make it an international company. The transaction when closed will become the biggest investment of Latvian company in Czech Republic to date. For Silon the transaction will allow to fully focus solely on the production and development of the highest quality polyolefin-based performance compounds.
Fibre production has been part of the traditional operations in Planá nad Lužnicí, 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 150 employees. Tesil Fibres is a key supplier of European market in segments like automotive, hygienic, textile and furniture industries and is well known for its highest quality standards. Last year the fibre division had sales of €27mn.
Salvis Lapiņš, Chairman of the Board at PET Baltija, commented: “This deal will put PET Baltija on a map of international players. We recognise Tesil Fibres high growth potential, its dedicated team of professionals and in close cooperation with that team and other stakeholders, we plan to develop the company even further, accelerate its growth, creating value to all involved. By ensuring supply of best suited recycled PETmaterials, we plan to significantly contribute to growth of Tesil Fibre business through adding more flexibility 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, commented: “The agreed acquisition reinforces INVL Baltic Sea Growth Fund’s goal to significantly expand PET Baltija through organic growth and bolt-on acquisitions. Since our investment PET Baltija alone grew its revenue by 116%, is on the track to finalizing an organic expansion project which will more triple its food-grade rPET production capacities, and with this deal will cement itself as an international vertically integrated player committed to sustainability and tackling environmental issues. This is a significant development for the company leading to becoming €100mn+ revenue company”.
Šuchrat Saidov, the CEO of Silon s.r.o. commented: “After a series of consultations and extensive market research, we decided that the best course for fiber division would be to find a respected strategic partner who can further develop it. We are pleased to say that we have found a solution which, we believe, will be the best possible outcome for fibre production in Planá, ensuring its future development and growth. SILON Group will now concentrate all growth and development efforts to compounding business.”
Both, Silon and PET Batlija emphasize that part of the agreement is a detailed handover plan, primarily targeted and ensuring that there are no changes to service that partners, customers, suppliers, employees or other stakeholders receive.
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
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
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 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 fiber business to technical application and the introduction of short-spinning fiber 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.
SILON s.r.o. and PET Baltija Executives Officers