BaltCap Infrastructure Fund II (BInF II) completed the acquisition of VKG Elektrivõrgud and now owns 100% of the company. VKG Elektrivõrgud is the second-largest electricity distribution network operator in Estonia after the state-owned Elektrilevi. BaltCap sees the acquisition as holding significant potential for horizontal growth both with electricity and grid-based services.
VKG Elektrivõrgud is the second largest regulated distribution network operator in Estonia after Elektrilevi, which is state-owned. Its network operations in northeastern Estonia cover the towns of Narva, Narva-Jõesuu, and Sillamäe, as well as surrounding areas with ca 71,000 inhabitants and heavy industry. The annual volume of VKG Elektrivõrgud’s electricity distribution in 2022 was ca 250,000 MWh. The grid consists of 946 km of power lines and 374 substations at low, medium and high voltages.
Marek-Andres Kauts, Investment Director at BaltCap, said he is content that the deal has been closed, and now emphasis can be put on growing the business further. “We see potential for horizontal growth and synergy from expansion to other electricity and grid-based services. Examples are electric vehicle charging, renewable energy generation, energy storage solutions, as well as telecommunications and street lighting,” Kauts said.
“Ida-Virumaa is the industrial heart of Estonia, and electricity distribution services must be flexible and affordable to serve the needs of the region, including industry and retail clients alike,” Kauts added.
The management team of VKG Elektrivõrgud will remain the same and continue in their current roles, with Ivo Järvala serving as the CEO. New advisory board has been established for the company, including BaltCap Managing Partner Simonas Gustainis and Investment Directors Marek-Andres Kauts, and Kristjan-Mart Piirsalu.