BaltCap acquires Ecoservice in €14.9m deal

The deal marks the first investment made via the GP's BaltCap Private Equity Fund II vehicle, which held its first close in February on €50.6m with subscribed commitments totalling €63m. The fund has a target of €100m and typically invests between €5-10m in equity per transaction.

The remaining 25% stake in Ecoservice will continue to be held by the company's existing owner City Service, a Lithuanian facility management and utilities services company listed on the Nasdaq OMX Vilnius. The business is a subsidiary of Lithuanian holding company ICOR.

The deal was introduced to BaltCap by City Service's adviser, Porta Finance, due to City Services' obligation to divest the business because of regulatory requirements.

Under BaltCap's ownership, the company plans to capitalise on the increase in waste generation in Lithuania as the country's economy continues to grow. According to BaltCap, around 75% of waste generated in Lithuania is put into landfill and the country plans on reducing this amount to 35% by 2020.

"Ecoservice currently operates in 12 municipal districts out of a total of 60," said BaltCap investment director Šarūnas Alekna. "Contracts are usually tender-based, so we expect to leverage on the company's operations when expanding in other regions."

Ecoservice hopes to consolidate the Lithuanian market, which is considerably fragmented at present. "Currently there are more than 100 companies engaged in municipal waste handing in the country, which is excessive considering market size," said Alekna.

There is also an opportunity for consolidation of the entire Baltic market. "The Latvian and Estonian markets will be considered in parallel after further analysis," said Alekna. "However Lithuania is first on our list of tasks."

unquote" yesterday published the first in a two-part series on private equity opportunities in the Baltic region, speaking with BaltCap managing director Peeter Saks.

Company
Founded in 1995 and headquartered in Vilnius, Ecoservice operates within the collection, transportation and processing of secondary raw materials and household waste.

The company has begun to pay greater attention to recycling and more developed waste collection systems in line with EU directives to lower landfill waste.

Ecoservice employs around 260 staff and generated revenues of €16m last year.

People
Jonas Janukėnas is the CEO of City Service. Šarūnas Alekna is an investment director at BaltCap and will join Ecoservice's board of directors alongside partner Simon Gustainis.

Advisers
Equity - Raidla Lejins & Norcous (Legal); TaxLink (Tax).
Vendor - PortaFinance (Corporate finance); TGS (Legal); EY (Financial due diligence, tax).

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