A syndicate led by the former Jefferson Smurfit deputy chairman Dr Dermot Smurfit has spent €20 million on the purchase of a paper mill in Finland from Stora Enso, the Finnish packaging giant.

Local sources in Finland said Dr Michael Smurfit, a brother of Dermot Smurfit and for decades the dominant figure in Jefferson Smurfit, was involved in the deal, which closed on Monday.

The property developer Seán Mulryan was also involved, they said.

The syndicate was advised by Lansdowne Capital, a London-based private investment house owned by the Dublin-born financier Alan Dargan.

Debt finance for the transaction was provided by Sampo Bank in Helsinki.

The Pankakoski Stora Enso plant at Lieksa, Finland is breaking even at present. The consortium plans to apply best international practice to its management.

The deal is the second big investment by Dermot Smurfit's syndicate, which is developing a portfolio of niche interests in the packaging sector through the purchase of non-core "orphan" assets as the industry restructures.

In late 2004, it bought a semi-chemical paper mill at Kuopio in Finland from M-real, another Finnish packaging multinational. Rebranded as Powerflute, that loss-making business was turned around within months.

Stora Enso said the annual sales in its packaging division would decrease by some €60 million and its working capital would reduce by some €12 million after the latest transaction took effect.

Lansdowne Capital did not name the investors but said they comprised "an international consortium of private investors including Dr Dermot Smurfit, Lansdowne Capital and other international private investors".

It added that Smurfit Kappa, which formed last year when Jefferson Smurfit merged with Kappa Packaging, was not involved in the transaction. It said Dermot Smurfit, who retired from Jefferson Smurfit in 2004 after some 40 years with the group, was acting "in his personal capacity".

Dr Smurfit said the group wanted to save the overwhelming majority of jobs in the mill, which employs 200.

"Pankakoski has a long and proud history and supplies the world standard for high grammage board grades. It is our intention to ensure that the mill's competitiveness on an international scale will allow it to prosper in the longer term," he said.

Mr Dargan established Lansdowne Capital in 1997. An accountant, he worked for years as an investment banker on Wall Street and was a managing director at SBC Warburg, now UBS.

He also worked for Credit Suisse First Boston and for SG Warburg/Warburg Paribas Becker.

His father was the late Dr Michael Dargan, a former Aer Lingus chairman.