Apollo Funds to acquire majority stake in Graanul Invest
US-headed alternative investment managers, Apollo Global Management, Inc. (Apollo), has recently announced that funds managed by its affiliates (Apollo Funds) have agreed to acquire a majority stake in Estonia-headed AS Graanul Invest (Graanul), Europe's largest wood pellet producer.
“We believe Graanul is a unique energy transition platform from which to build around the once-in-a-generation shift in the European energy mix," said Geoffrey Strong, Senior Partner at Apollo.
Since its inception in 2003, Graanul Invest has been pioneering some of the most advanced processes and technologies in the biomass and bioenergy industry and providing a critical baseload renewable energy resource. The company operates 12 state-of-the-art pellet production plants located in Estonia, Latvia, Lithuania, and Texas (TX) in the United States (US) with a combined annual production capacity of 2.7 million tonnes.
With the accelerating Energy Transition in Europe and globally, baseload renewable energy sources such as biomass are a critical and enabling piece of the puzzle, by providing dispatchable electricity and heat to must-run facilities. Raul and the Graanul team are best-in-class in this industry and have done an excellent job scaling and positioning the business to play a critical role supporting this energy transition, as a reliable supplier to its customers, with proven sustainability, said Apollo’s Brad Fierstein.
The Group also operates six combined heat and power (CHP) plants in Estonia and Latvia and is one of the largest producers of renewable energy in the Baltic region, having generated more than 17 percent of all renewable bioelectricity in Estonia in 2020. The highly energy-efficient CHP plants power the company’s pellet manufacturing operations, helping it to achieve the lowest carbon footprint in the industry.
We believe Graanul is a unique energy transition platform from which to build around the once-in-a-generation shift in the European energy mix. We look forward to building on that success together with Raul and the team and continuing to grow the business organically and through attractive development opportunities in the biomass market, said Geoffrey Strong, Senior Partner and Co-Head of Natural Resources and Infrastructure at Apollo.
All Graanul operations and activities follow the principles and criteria of the leading sustainable forest management (SFM) systems, and the Group maintains multiple independent, third-party sustainability certifications confirming that it excludes any unverified material in its production processes to ensure environmentally friendly and sustainable sourcing of materials.
In Apollo, we will have a sophisticated strategic investor who is not only intimately familiar with our business but also understands the complexities and the unique value opportunities present in the bioenergy space today. Our operations and activities have always been – and will continue to be – designed for and dedicated to creating a globally sustainable and renewable energy system to replace fossil fuel emissions. Our team and people, as well as our corporate structure and operations, are a highly valued foundation to the exciting growth ahead with Apollo. New capital and global connectivity will provide new international opportunities for Graanul and its employees as we build on the company’s many achievements together, said Raul Kirjanen, Chairman and CEO of Graanul.
The transaction, which is expected to close later in 2021, is subject to antitrust and regulatory approvals and other customary closing conditions.
J.P. Morgan served as financial advisor and Ellex and White & Case LLP served as legal advisors to Graanul. Allen & Overy LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Sorainen served as legal advisors to the Apollo Funds.