Acting as local counsel in the Baltics through Allen & Overy’s London office we advised Apollo Global Management (Apollo), a global alternative investment firm, on acquiring a majority stake in Estonian-based Graanul Invest (Graanul), the largest producer of sustainable wood pellets in Europe – and one of the largest producers globally.

Pioneer in the industry

Since its inception in 2003, Graanul 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. Through its 12 state-of-the-art pellet production plants located in the Baltics and the U.S., Graanul manufactures sustainable wood pellets, which are a proven, renewable energy source, enabling baseload electricity and heat generation to replace coal and balance intermittent renewable energy sources like wind and solar.

Graanul 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 manufacturing operations, helping it to achieve the lowest carbon footprint in the industry.

Critical part of the global energy transition

“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,” said Apollo’s Brad Fierstein. “Raul (Raul Kirjanen, CEO of Graanul) 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.”

Geoffrey Strong, Senior Partner and Co-Head of Natural Resources and Infrastructure at Apollo, added, “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.”

The transaction is Apollo’s first transaction in Estonia, as well as their first transaction in the forest products sector. The transaction, which is expected to close later in 2021, is subject to antitrust and regulatory approvals and other customary closing conditions.

Our services and client team

Our team is advising the client on Estonian, Latvian and Lithuanian law aspects of the deal, providing assistance in the course of the legal due diligence and local aspects of transaction documentation, including preparations for closing.

Our pan-Baltic project team was led by senior associate Robin Teever, supported by partners Toomas Prangli and Piret Jesse, counsel Renāte Purvinska in Latvia and senior associate Inga Macijauskaitė in Lithuania and also included:

In Estonia: counsels Piibe Lehtsaar and Pirkko-Liis Harkmaa, senior associates Mirjam Vichmann, Triin Ploomipuu, Kaspar Endrikson and Britta Retel, associates Liisa Maria Kuuskmaa, Kirsi Johanna Koistinen, Kadri Puu, Nele Suurmets and Mirjam Metsik.

In Latvia: counsel Andis Burkevics, senior associates Andris Vilisons, Natalija Sestakova, Zanda Frišfelde, associates Anna Bogdanova and Liva Aleksejeva.

In Lithuania: partner Sergej Butov, senior associates Aurelija Daubaraite, Vaiva Mašidlauskienė and Svetlana Rudaja, associates Gabriele Raizyte and Sidas Sokolovas and assistant lawyer Goda Jakubauskaitė.