One of the largest PET recyclers in Northern Europe backed by INVL Baltic Sea Growth Fund acquires Czech fibre producer

PET Baltija, one of the largest PolyEthylene Terephthalate (PET) recyclers in Northern Europe, today announces an agreement to acquire a leading Czech fibre producer Tesil Fibres s.r.o, a spin-off of SILON s.r.o. Once closed, this transaction will become one of the largest investments by a Latvian company in the Czech Republic to date.

This vertical integration transaction will subsequently increase PET Baltija’s current revenues by more than 50% while also making it an international company. For SILON, the transaction will enable it to fully focus on both the production and development of the highest quality polyolefin-based performance compounds.

Fibre production has been part of the traditional operations in Planá, 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 c. 150 employees.

Tesil Fibres is a primary supplier to the European market, covering industries and sectors that include automotive, hygienic, textile and furniture. It is also well known for its high quality standards and last year its fibre division recorded sales of €27million.

Salvis Lapiņš, Chairman of the Board at PET Baltija, commented: “This deal will really put PET Baltija on a map as a key international player for the sector. We recognise and are excited by Tesil Fibres’ impressive high growth potential and its dedicated team of professionals. Working closely with the team and other key stakeholders, we plan to develop the company further, accelerating its growth and creating real value for all those involved. By ensuring the supply of best-in-class recycled PET materials, we will look to significantly contribute to the growth of the Tesil Fibres business and add greater product differentiation 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, added: “This agreement to acquire reinforces INVL Baltic Sea Growth Fund’s goal to significantly expand PET Baltija through both organic growth and bolt-on acquisition strategies. Since our initial investment, PET Baltija alone has more than doubled its revenue and is on track to finalise an organic growth expansion project that will more than triple its food-grade PET production capabilities. This deal will cement the company as a truly international vertically integrated market player that is committed to sustainability and tackling environmental issues. This represents a significant development and leads to become a €100million+ revenue company.”

Šuchrat Saidov, CEO at SILON s.r.o. concluded: “Following a series of consultations and extensive market research, we decided that the best route to success for the fibre division would be to identify a respected strategic partner who can further grow and develop it. We are delighted to report that we have found a solution which, we believe, will be the best possible outcome for fibre production in Planá. The SILON Group will now focus all its growth and development efforts towards compounding business.”

Both, SILON and PET Batlija emphasise that part of this agreement is a detailed handover plan, primarily targeting and ensuring that there will be no changes to the current service offering that highly valued partners, customers, suppliers, employees or other key stakeholders receive.

PET Baltija

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.

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 s.r.o.

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 fibre business to technical application and the introduction of short-spinning fibre 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.