INVL Baltic Sea Growth Fund, the leading private equity investment fund in the Baltic region, has completed the acquisition of the most modern medical treatment centres in Birštonas, Nemunas as well as the largest rehabilitation and post-acute care treatment centres in the Baltics, Eglės Sanatorija. The transactions were closed following regulatory approval from the Lithuanian Competition Council.
Nerijus Drobavičius, Partner at INVL Baltic Sea Growth Fund, commented:
“We are continuing to invest in this high performing sector and look forward to further strengthening leading position in the Baltic States, created by the shareholders, managers and employees of the company. The healthcare sector in Lithuania and the entire Baltic region, as well as in other European Union countries, has high potential for growth as society continues to pay more attention and puts more focus on health restoration and strengthening individual well-being. Due to its impressive quality offering and extensive range of healthcare services, the Eglės Sanatorija brand has become probably the best known in Lithuania and we look forward to a new chapter of growth in partnership as we head into 2023.”
The transaction was financed by the fund, fund co-investors and debt financing. INVL Baltic Sea Growth Fund together with other investors will now own 100% shares of Namita, which manages the medical treatment centre Nemunas. Namita also acquired 100% shares of the Eglės Sanatorija.
Vika Butkutė, Chairman of the Board at Eglės Sanatorija, added:
“It is extremely important to us, after many decades of both growing and developing our business, that it was acquired by professional investors that have strong operational expertise in the healthcare sector in Lithuania and internationally. We are therefore confident that this new direction will help to modernise, innovate, and improve customer experience and will subsequently ensure that Eglės Sanatorija will continue to be successful in the future.”
According to Artūras Salda, the Chief Executive Officer of the Eglės Sanatorija, the wellness centre is already ranked and positioned as one of the best European sanatoriums and properties. Furthermore, he is confident that the onboarding of a new, experienced investor will further stimulate business growth in Lithuania and beyond. This strategic approach will allow for the expansion of the range of quality professional services that meet the ever-changing needs of the customers and market today.
Vytautas Plunksnis, Partner at INVL Baltic Sea Growth Fund, concluded:
“This year, both the fund and its portfolio companies have actively made acquisitions and expanded into new markets. After investing in rehabilitation and sanatorium treatment centres, the fund’s portfolio already includes seven companies in which the fund has invested over EUR 100 million. With more investments planned in 2023, we will then start fundraising for the new fund later in the year.”
Established in 1972, Eglės Sanatorija provides post-acute and recovery treatment and medical rehabilitation plus wellness services to Lithuanian residents and guests from abroad in the resorts of Druskininkai and Birštonas. These locations are famous for their mineral water springs among other attractions. The facility that operates in Druskininkai is currently the largest not only in Lithuania, but also in Northern Europe. It can accommodate up to 1,300 guests at the same time with the premises in Birštonas housing up to 730 guests. Guests are offered a wide variety of therapeutic and wellness procedures, from traditional mud and mineral water practices to innovative physiotherapy and kinesitherapy procedures as well as others.
Prior to the pandemic, foreign tourists made up a significant percentage of all clients for Eglės Sanatorija. A larger part of the sanatorium’s income is made up of commercial revenues with some services also financed by regional health insurance funds. The total combined revenue of the functional diagnostics and rehabilitation centre Nemunas and the Eglės Sanatorija last year reached EUR 23.4 million, with both companies employing over 700 people. It is planned that consolidated revenue for 2022 will be more than EUR 30 million.
There are also plans to further invest in the projects with the renovation of the old sanatorium buildings in order to increase the energy efficiency of the premises as well as adapting the renovated premises in order to offer new procedures and services.
Sorainen acted as legal advisors of the Fund and Law firm WALLESS represented sellers for this transaction. The buyer was represented in the transaction by the financial advisory firm Deloitte.
With a size of EUR165 million, the INVL Baltic Sea Growth Fund is one of the largest private equity funds in the Baltics. The European Investment Fund (“EIF”) is its anchor investor.
The EIF, which is a part of the European Investment Bank, has committed EUR30 million with the support of the European Fund for Strategic Investments (a key element of the Investment Plan for Europe, or ‘Junker Plan’) whilst also allocating resources from the Baltic Innovation Fund, a “fund of funds” initiative developed in cooperation with the governments of Lithuania, Latvia and Estonia. The initiative aims to increase capital investment in high-growth potential small and medium-sized enterprises in the Baltics.
The fund seeks to assemble a diversified portfolio of companies, targeting majority or significant minority stakes through investments ranging from of EUR 10 million to EUR 30 million. These companies must demonstrate high growth potential and an ability to succeed in conditions of increasing global competition and market volatility.
The fund is focused on the Baltic countries and neighbouring regions including Poland, the Nordics, and Central Europe. The fund has invested in seven companies to date, focusing on sectors including healthcare, medical rehabilitation, civil engineering, environmental management (plastic recycling and waste management), veterinary services, and the manufacturing of cosmetics and hygiene products.
The fund is managed by INVL, the leading Baltic investment management and life insurance group. The group’s companies manage pension and mutual funds, life insurance directions, individual portfolios, private equity as well as other alternative investments. More than 300,000 clients in Lithuania, Latvia and Estonia plus international investors have entrusted the group with the management of over EUR 1.75 billion of assets. With a track record spanning 30 years, the group has strong expertise and experience in managing private equity assets and building true market players that are leaders in their respective fields in the Baltic countries and across Central and Eastern Europe.