East Capital exits Elko Grupa

East Capital achieved a total return of 107% and an IRR of 11% on its investment. The proceeds of the sale of the 8.8% equity stake will be returned to the GP's East Capital Bering New Europe Fund, East Capital Bering Russia Fund, and East Capital Bering Ukraine Fund vehicles.

The total return, excluding dividends, had an alpha of 80% due to the Baltic benchmark index remaining flat during the holding period. The GP exited Elko at a valuation 36% higher than the value at which its funds held the business on their books, which followed a 15% increase in valuation made in October 2012.

Previous funding
East Capital initially provided Elko with growth capital in 2005 to support the company's development. During the financial crisis in 2008 and 2009, which hit Latvian businesses particularly hard, the investor provided a further debt financing facility for the company.

The company doubled the number of products it offers and built up a customer and vendor portfolio to further strengthen its position in the region. Elko's turnover increased more than 1.5 times over the holding period. 

Company
Elko is an Eastern European IT product wholesaler founded in 1993. Its main business area is the wholesale of computer and electronic products in the Baltic states, Central and Eastern Europe, and CIS member states. The company offers more than 15,000 products from well-known clients including Acer, Asus, Intel, Microsoft, Sony and Western Digital.

The group employs 340 people and is based in Riga, with further regional offices in seven Eastern European countries and Russia.

People
Aivaras Abromavicius worked on the deal as senior adviser and partner at East Capital; Gert Tiivas is head of East Capital Private Equity Baltic States. 

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• Topics
• Exits
• CEE
• Consumer
• East Capital
• Latvia