Category: Estonia

Sorainen has advised pan-Baltic private equity firm Livonia Partners on its acquisition of Hortes, a leading retail brand for home and gardening products in Estonia. 

“Retail is one of the strongest industries in Estonia, consistently outperforming GDP, and Hortes is one of Estonia’s most successful retail brands,” says Rain Lohmus, a founding Partner at Livonia. “Its concept is unique and profitability is growing. We’re proud to team up with an experienced management team to further expand the business.”

The Hortes investment is the second for Livonia Partners Fund I, which invests in medium-sized companies in the Baltics. With its first investment, in February this year, the fund acquired the sauna and thermo-treated wood products manufacturer Ha Serv in Estonia (as reported by CEE Legal Matters on February 22, 2016).

Hortes, established in 2004 by Trigon Capital and Finnish investors, runs the largest modern home and garden center in Estonia. According to Sorainen, “it successfully delivers an inspirational shopping experience in spacious glass-structure premises with a broad and unique selection of products.”

“The concept has proven itself and we are ready to scale,” says Hortes CEO Kristian Kalgan, who has led company since 2007. “Livonia Partners’ investment and professional growth know-how will help us expand the business faster.”

Livonia will own 100 percent of the company, according to Kristine Berziņa, another founding Partner. “Hortes plans to expand regionally in Estonia and potentially to other countries. It’s one of the best retail concepts to come out of Estonia,” she says.

The Sorainen team consisted of Partner Toomas Prangli, Senior Associates Piret Lappert and Piibe Lehtsaar, and Associates Kai Vainola and Britta Park.

Sorainen did not reply to our inquiries about the identity of the sellers, or the external counsel which represented them.

Cobalt Estonia has advised BPM Mezzanine Fund SICAV-SIF, SCA on matters related to the financing of AS Eskaro. 

Cobalt describes AS Eskaro as “one of the leading producers of paints in the region, with factories in Estonia, Finland, Belarus, Russia, and Ukraine.” The company, which is a subsidiary of Eskaro AB, has been operating for over 20 years, starting in Tallinn in 1993. The company will be using the funds as working capital, as well as for refinancing. According to Andres Assor, a member of the Eskaro Board of Directors, “this transaction is an important step forward for us providing financial stability and strength for further growth. Eskaro brands are among the most recognized and trusted by consumers in our key markets. Attracting a strong financial partner allows Eskaro to continue gaining the market share in the countries we operate.”

BPM Capital is an independent investment company with offices in Tallinn and Warsaw. Cobalt describes BPM Mezzanine Fund as “a vehicle for several distinguished investors.” It was originated through the Baltic Innovation Fund (BIF) initiative created by cooperation between Estonia, Latvia, Lithuania, and the European Investment Fund. 

The Tallinn-based Cobalt team included Partner Peeter Kutman, Senior Associate Ott Aava, and Associate Sille Rastas.

Sorainen has announced that Partner Allar Joks — who had been campaigning to become the President of Estonia since May — has returned to the firm’s Estonian office, Joks was one of two candidates who advanced to the final round of voting last Saturday, September 24, 2016, but neither of candidate received the number of votes required to become president. After four rounds of voting, the country remains without a head of state.

“I was glad to see that the values which I have stood for during my entire life – equal opportunities for all, justice, as well as honest policy making – received such strong support,” Joks commented in a story on the Sorainen website. “I have been asked many times whether I will go into politics. The answer is no. My party is Sorainen.” According to Sorainen, “the Estonian presidential election year has been exceptionally dramatic, with the country’s complicated election system coming under criticism and demand increasing for direct presidential elections. In the first attempt to elect a president in August, the parliament failed to elect anyone in two rounds of voting. Therefore, a second attempt occurred last Saturday, 24 September, when a 335-member electoral college from all over Estonia gathered to cast their ballots.”

In the first round of the September 24 voting, Joks received the highest number of votes (83) out of the five candidates, and he and fellow candidate Siim Kallas, who received the second-most, advanced to the second round of voting. Sorainen reports that Joks said that this good result in the first round was a testament to the work that had gone into his campaign, as he spent the summer meeting with people across Estonia to discuss the needs of the country.

In the second round of voting, Joks received 134 votes and Kallas received 138 votes. As neither candidate received the required 168 votes to be elected, no president was chosen.

In addition to Joks and Kallas (the former Prime Minister and Vice-President of European Commission), other candidates included former Foreign Minister Marina Kaljurand (who quit her minister’s post in order to run for President), Centre Party’s board member Mailis Reps, and Conservative People’s Party’s Chairman Mart Helme.

The Estonian presidential election now returns to the 101-member parliament that previously failed to agree on a president. The law requires that 68 ballots must be cast in favour of the winning candidate.

After Saturday’s proceedings, Allar told the media that he will not campaign again in the parliament, and would return to Sorainen. Joks, who is a Partner at Sorainen and head of the Government Relations & Administrative Law Team and head of the Tax & Customs Team in Estonia, specializes in constitutional and administrative law. 

Estonian disputes boutique Nove has announced that the Estonian Ministry of Justice appointed Nove Partner Urmas Volens as head of the expert group for revising the country’s corporate law. 

According to Nove, “the aim of the public procurement was to find a group of high level legal experts whose task is to conduct a comparative study on the corporate law and to elaborate a draft law for modernization of the whole field of corporate law.”

In addition to Volens, the working group includes Nove Attorney Arsi Pavelts, Supreme Court Judge Villu Kove, University of Tartu Associate Professors Martin Kaerdi, Kalev Saare, and Andres Vutt, University of Tartu Lecturer Margit Vutt, and Attorney Sander Karson.  

Volens commented on the extensive nature of the project, saying, “according to the assignment given to the working group the revision will be the most thorough analysis of the corporate law since the Commercial Code entered into force in 1995. The status of a legal expert in the working group is a significant recognition to the work of all the team members. The academic results and practical experience of the experts in the working group, as well as the long-term experience of co-operation on different projects, allows me to be convinced that the revision will be successful.”  

The corporate law revision will be co-financed by the European Social Fund and the Estonian Ministry of Finance.

Cobalt has advised the AS Ekspress Grupp, a leading media group in the Baltic countries listed on Tallinn Stock Exchange, on its acquisition of a 49% holding in Babahh Media OU, an Estonian company that engages in video production, media solutions, and the sale of video related infrastructure solutions, from Tomarek Invest OU and Heeringas OU. Primus advised the sellers on the deal.

According to Cobalt, the goal of the acquisition is to expand Ekspress Grupp’s business “in the quickly changing area of video production and video transmission on the Internet.” AS Ekspress Grupp also secured the option to acquire additional shares in Babahh Media OU in 2021, which would result in its holding in Babahh Media OU’s share capital would increase to 70%.  

The Cobalt team advising on the transaction included Partners Peeter Kutman and Kristel Raidla-Tallur with Associate Greete-Kristiine Kuru.

Editor’s Note: After this article was published, Primus announced it’s team consisted of partner Ermo Kosk and Senior Associate Sandra Vark.

Njord has advised DFDS A/S, the biggest Northern-European shipping and logistics services provider, on its acquisition of the Paldiski (Estonia) – Hanko (Finland) shipping line from Navirail OU. As previously reported, Navirail was advised on the deal by the Derling firm.

According to a statement released by Njord, “the transaction contained a four-year time-charter agreement of RO-PAX ship, and a purchase earnout scheme.”

Njord performed legal due diligence, submitted the notice of concentration, and prepared agreements for the multiple-step transaction.  

The Paldiski-Hanko line — which generated turnover of approximately EUR 10.7 million in 2015 — will be serviced by Sailor, a RO-PAX ferry.   

The Njord team consisted of Partners Anne Veerpalu, Veikko Toomere, and Katrin Sarap, and Associates Siiri Kuusik, Siiri Traat-McClelland, and Raimo Klesment.  

The Nove law office and the Estonian Center for Applied Research (“CentAR”) are announcing that have been selected via a public procurement process jointly organized by Estonia’s Government Office and the Ministry of Justice to study the “Regulation of Cross-Border Mobility of Companies in the European Union.”

According to a statement on the NOVE website, the aim of the project “is to obtain an overview of how much and in which cases there is a need for companies to change their registered addresses in a cross-border manner (mapping of needs and cases). Mapping the needs is important to assess whether the existing regulation is sufficient for solving these situations or whether the regulation needs upgrading.”

Another objective of the project, according to Nove, “is to find out what kind of problems related to corporate law the companies have experienced in the course of the cross-border movement. The mapping of needs, cases and problems will result in a legal analysis to assess whether in order to solve the problems perceived by the business operators a modification of the Estonian or the EU law is required or whether implementing other measures shall be sufficient.”

When the analysis concludes, proposals will be presented to the contracting entity. According to Nove, “the cross-border mobility of companies, i.e. creating better solutions to change the home country is an important issue according to the current strategy with Estonia as the Presidency of the Council of the EU steering the Member States towards agreements. Thus, the study supports the Estonian priorities during the future Presidency of the EU.”

Nove attorneys Arsi Pavelts and Urmas Volens will participate in the research for and preparation of the report, accompanied from CentAR by Epp Kallaste and Janno Jarve.

Raidla Ellex has announced that Elisabet Fura, the former Chief Parliamentary Ombudsman of Sweden, has joined the Estonian firm as a Counsel and, the firm reports, she “will have a leading role in promoting legal cooperation between the two countries.” 

“Having a former Swedish ombudsman with such an outstanding legal career joining our firm, emphasizes an exceptional supplement to our expertise in Raidla Ellex,” said Sven Papp, Partner of Raidla Ellex. He added that Elisabet Fura marks a new beginning for cooperation of Baltic Sea countries as Fura will be associated with promoting business and juridical collaboration between Estonia and Sweden. “According to deal-ranking statistics in the Baltic region we can say that majority has been definitely related with Nordic investments,” Papp added. “The Nordic investments activity trend is not upwards now, but in terms of overall deal value, the first position belongs to Nordic companies.”

Elisabet Fura commented: “I am very happy to be given this opportunity to contribute to the development of what is already a leading law firm in Estonia, my new adopted country. It is also a source of great satisfaction for me to return to my professional roots since I was for many years an ‘advokat,’ member of the Swedish Bar Association, and my professional identity has been shaped by this experience.”

According to Raidla Ellex, “Fura has a background of corporate, transport, and bankruptcy law as well as litigation as the judge on the European Court of Human Rights.” The firm reports that “Elisabet is working closely with both of Ellex’s core teams — the corporate/M&A team and the litigation team,” and says that, “Elisabet is without saying also instrumental for the development of Ellex professional relationships within the Nordic countries.”

Fura has previously worked with the Swedish Courts and has been a Partner at Sweden’s Advokatfirman Vinge. She has served as Deputy Chairman and Chairman of the Swedish Bar Association, and from 2003 until 2012 she was a judge at the European Court of Human Rights. In addition she has served as an expert on several parliamentary committees in Sweden.

Sorainen is advising the Estonian Development Fund (EDF), a public institution established by the Estonian Parliament to support improvements in the Estonian economy through investment in knowledge- and technology-intensive Estonian business in the start-up phase, and SmartCap, a venture capital fund management company established by the EDF to manage venture capital Early Fund II to restructure their direct investment portfolio. 

According to Sorainen, in August 2014, the EDF supervisory council decided to restructure Development Fund investment activity. As explained by Ville Jehe, Chairman of the Development Fund council, “Development of the market has reached a stage where there are enough private fund management companies and the state itself no longer needs to provide a fund management service.” In August 2016, the EDF, SmartCap, and the European Investment Bank (EIB) announced a call to find a private fund manager for a direct investment portfolio that includes 15 start-ups. The EIB is involved in the project in order to ensure transparent and non-discriminatory competition. 

Sille Pettai, Fund Manager of SmartCap, said that the private fund manager is expected to create a new fund, manage a direct investment portfolio and make follow-on investments. “Existing holdings in portfolio companies as well as up to 10 million euros for follow-on investments will be contributed to the new fund,” she said. The winner of the call must manage the fund according to market conditions. The fund managed by the private fund manager will retain earlier investment principles, as all the investments in portfolio company equity will be joint investments with private investors. The new fund should begin operating in Q1 2017. Direct investments will continue to be managed as before until a private fund manager is appointed. 

According to Sorainen, “restructuring the activities of these funds is a unique process in Estonia as it is the first time that management of investments is being transferred from the public sector authority to a private fund manager, including a private fund manager selection process as described above.”

Sorainen advised the EDF and SmartCap on legal issues related to structuring and preparing for the selection procedure to find a private fund manager for the current direct investment portfolio, including advising on complex public procurement, state aid and fund regulation issues, and share option program-related matters plus assisting in drafting the terms and conditions for the selection procedure of a private fund manager. The firm’s team advising EDF and SmartCap was led by Partner Reimo Hammerberg and included Specialist Counsel Paul Kunnap, Senior Associates Jane Eespold, Kaspar Endrikson, Kadri Harginen, and Veiko Vaske, and Associate Kristina Promet.

Primus has advised Skeleton Technologies, a leading ultracapacitor manufacturer in Europe, on EUR 13 million in new investment it received from FirstFloor Capital, a Malaysian venture capital investment firm specializing in funding high-growth technology companies. Deloitte Legal advised FirstFloor Capital.

The Round C investment, which also includes existing Skeleton Technologies’ investors UP Invest and Harju Elekter, brings total financing to EUR 26.7 million and will support Skeleton Technologies in its next phase of revenue ramp-up to bring graphene ultracapacitors from high-end sectors to the mass market, while moving higher up the value chain with turnkey energy storage solutions.

According to Primus, “ultracapacitors are high-power energy storage devices with more than 100 times increased power density across more than a million life-cycles, compared to the best battery technologies. Skeleton Technologies’ devices are the only ultracapacitors to use a patented graphene-based material in their manufacture, allowing them to deliver twice the energy density and five times the power density of their competitors.”

The Primus team advising Skeleton Technologies on the capital raising transaction and related legal matters was led by Partner Ermo Kosk.

Deloitte Legal did not reply to our inquiry on the matter.