US Investment fund Apollo to acquire majority stake in wood pellet firm

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Graanul Invest's owner and CEO, Paul Kirjanen.

Apollo Global Management, an international asset management company listed on the New York stock exchange, on Wednesday announced an agreement, as a result of which its subsidiary Apollo Funds will acquire a majority stake in AS Graanul Invest, an Estonian producer of wood pellets and a company in the biomass and bioenergy sector.

The deal supports the asset management company's goal to boost the transition to renewable energy sources and meet Europe's renewable energy targets with the production of wood pellets made from sustainable biomass, Apollo said.

Through its 12 state-of-the-art pellet production plants located in the Baltics and the United States, 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.

The company 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.

Wood pellets are manufactured from waste wood, such as sawdust, wood chips and shavings, and forestry residues, which is processed into pellet form, creating a high energy density fuel source. All Graanul operations and activities follow the principles and criteria of the leading sustainable forest management systems, and the company 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," Raul Kirjanen, chairman and CEO of Graanul, said.

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.

Apollo is a high-growth, global alternative asset manager. As of March 31, 2021, Apollo had approximately US$461 billion- worth of assets under management. 

Founded in 2003, the Graanul Invest group operates in the field of bioenergy and renewable energy production, forestry and biomaterials development. The company employs over 500 specialists. Last year, Graanul Invest earned a net profit of €53.5 million with a turnover of €348.5 million.

Graanul Invest's parent companies are OU Biofuel, owned by Raul Kirjanen, with 50.63 percent and Neoinvesteeringud, owned by Anders Anderson, with 39.37 percent.

Apollo Global Management is unconnected with the Estonian holding company, Apollo Group.

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Editor: Roberta Vaino

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