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East Capital Funds Exit Latvia’s Elko IT Group With 107% Return

East Capital sold its 8.8 percent stake in Latvian computer wholesaler Elko Grupa AS, completing the Stockholm-based asset manager’s seven-year investment with a total return of 107 percent.

East Capital’s Bering New Europe Fund, Russia Fund and Ukraine Fund sold their shares to companies controlled by Elko managers that were already shareholders, according to Gert Tiivas, the asset manager’s Baltic head of private equity.

“The time was right to exit, plus we see a lot of other interesting Baltic investment opportunities,” Tiivas said today by phone. Market conditions meant an alternative exit strategy of selling the Elko shares in an initial public offering “wasn’t realistic in the short and medium-term.”

Riga-based Elko, which distributes Acer Inc. notebook computers and other IT products mostly in Russia, Ukraine and the Baltic states, is Latvia’s fifth-biggest company by sales. In August it delayed plans to hold the Baltic country’s first IPO in eight years as euro-region nations battled to avoid a Greek exit from the common currency. East Capital had provided equity and debt capital to help the company develop since 2005.

Amber Trust II S.C.A., a fund registered in Luxembourg, owned 17.67 percent of Elko shares as of June 2011, according to an IPO prospectus on the Latvian financial regulator’s website. Excluding East Capital holdings, the remaining shares were held by private investors.

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