Investment Cases

Rokiškio sūris

In the beginning of 2004, HC acquired a 38% stake in Rokiškio sūris (RS), the largest dairy in the Baltic States. Exiting investors were the European Bank for Reconstruction and Development (EBRD) and the East Europe Food Fund (EEFF) who decided to reduce their exposures to the Central and Eastern European countries.

At the time of the acquisition, RS had a strong management team who was facing a market repositioning challenge to shift sales of fermented cheese from the US to the EU and Eastern European markets. HC was convinced that the management would succeed in winning market share in a new region for the company.

Following the accession to the EU, RS has successfully transferred most of its export sales to the European Union and Russian markets, causing the share price surge by more than 50 per cent. In spring 2005, HC sold its stake to the company management in a leveraged MBO transaction, thereby realizing strong capital gains and accumulating funds for forthcoming investments.

Snaige

In autumn of 2001, HC acquired 45% shares in the Lithuanian appliance manufacturer Snaige. Following this, HC took over Management Board and eventually made some replacements among the top managers of the company. Moreover, the main focus was dedicated to direct cost cuts while exploring product price increases in certain markets.

These efforts resulted into satisfactory gross margin within first year. Therefore, due to improved profitability Snaige’s Board increased investments into advanced technology, new product development and design.

In 2002 the company came to the Slovakian market and bought assets of bankrupt company Novy Calex. Later on, the acquired equipment was used in Kaliningrad where the new factory had been built.

In 2003 and 2004 the complete reorganization in marketing and sales department was carried out.

Since then, company’s sales rose 30% (till €80 million) and net income reached €7,2 million. Restructuring attempts were recognized by investors and this increased capitalization of shares market over €100 million.

Snaige sells its products to 40 different European and CIS countries, thus, export share in total sales accounts for 93%.

The year 2004 is remarkable to the company because a new refrigerator factory has been built in Kaliningrad (Russia). It is expected that this new plant and investment of €20 million will mean doubling in annual capacity to 800 000 units. Presently Snaige has an opportunity to become an important European player with a lucrative access to Russia’s highly protective market as well as other CIS markets.

Vilniaus Vingis

In 2000 HC acquired a manufacturer of electronic components, Vilniaus Vingis (VV).

Soon after, supervision over investment programs and budgets was initiated by HC. What is more, HC conduced towards the development of awareness of VV among financial institutions and investors.

The turnover of the company reached €37 million in 2003.

During 2000 and 2003 the sum of €35 million was invested into the technologies and equipment and despite recession in the global electrical industry, Vilniaus Vingis was developing rapidly, which was a surprise to many skeptics not only in Lithuania, but in foreign countries as well.

In 2003 Vilniaus Vingis became the biggest producer of deflection yokes in Europe.

In 2004 HC successfully sold the shares of the electronics company on the stock exchange as well as to the financial institutions due to HC’s decision to concentrate the investments on the dairy industry and domestic appliances manufacturing. HC’s investment in Vilniaus Vingis was among the most successful recent transactions in Lithuania.