BaltCap and Draugiem Capital become majority shareholders of IGLU brand developer Pepi Rer

BaltCap, the largest private equity fund manager in the Baltics, and investment company Draugiem Capital invest in Latvia-based multi-sector production company SIA Pepi Rer to boost the global expansion of the business. Pepi Rer is widely known for its soft play brand IGLU, floor insulation brand ProVent, as well as the production of construction and packaging materials. After the transaction, BaltCap and Draugiem Capital will become the majority shareholders of the company.

Founded in 1998 and based in Valka, Latvia, Pepi Rer is a manufacturing and e-commerce company producing a wide range of polyethylene foam and air bubble film products. The D2C exporter of the IGLU Soft Play brand of kids’ toys and packaging and construction materials exports 90% of its sales to more than 40 countries around the world. After the introduction of the IGLU brand in 2015 the company has more than doubled its revenue reaching a turnover of €13,5 million and profit of €1,7 million in 2022. The company employs 200 people.

The co-founder and co-owner of Pepi Rer, Viesturs Lucāns comments: “The greatest asset of our company is the people who work here, many of whom have been with us since day one. We also chose our investment partners carefully, after all—they are people, too. We received many offers, but the teams at BaltCap and Draugiem Group created confidence in us. I trust their knowledge and experience in backing local companies on their growth journey, and helping Pepi Rer to reach new heights both in introducing innovative technologies and entering new markets”.

Draugiem Capital investment director Dāvis Siksnāns shared the growth plans: “We see great potential to develop the IGLU brand by expanding sales both on platforms such as Amazon and the company’s website, using our 19 years of knowledge from companies such as Printful, Fast Brands and others”.

“Pepi Rer’s success has been achieved with the dedication and persistent work of the company’s founders, management team and employees. We deeply appreciate their contribution and see a great opportunity to continue this growth story. Our ambition is to make the company a leading player in its niche in the USA and other export markets, using BaltCap’s 25 years of experience in taking more than 100 local companies to the international level,” says BaltCap investment director Sandra Aile.

After the completion of the transaction, a new supervisory board will be formed with BaltCap investment directors Sandra Aile and Pēteris Treimanis, as well as Draugiem Capital investment director Dāvis Siksnāns serving as board members.

The acquisition of Pepi Rer is the second joint investment of BaltCap and Draugiem Group. In 2012 BaltCap invested €0.5 million in Draugiem Group company Vendon. After joint development, the company was acquired in 2022 by Spain’s most prominent international technology company Azkoyen. Without up to €4.0 million earnout part, the Vendon deal size reached €9.3 million.

About BaltCap Private Equity Fund III
Private Equity Fund III (BPEF III) invests in innovative companies in the Baltic and Nordic countries following buy-and-build strategy. BPEF III was established in co-operation with European Investment Fund (EIF), the European Bank for Reconstruction & Development (EBRD), the Nordic Environment Finance Corporation (NEFCO), LHV pension funds, SEB pension funds from Estonia, Latvia and Lithuania, eQ Asset Management and also family offices. EIF has invested through Baltic Innovation Fund 2 (BIF 2, an initiative created by cooperation between the Republic of Estonia, the Republic of Latvia, the Republic of Lithuania and EIF) and EIF’s investment in BPEF III also benefits from the financial backing of the European Union under the European Fund for Strategic Investments (“EFSI”) set up under the Investment Plan for Europe. The purpose of EFSI is to help support financing and implementing productive investments in the European Union and to ensure increased access to financing.