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Innovation is all around us as businesses continue to develop new inventions, invest heavily in R&D, and register new Intellectual Property (IP) rights. However, the increase of such intangible assets lends itself to more things keeping decision makers up at night. The value has been created but is it being adequately protected? What are some of the key liabilities and exposures relating to intellectual property rights such as the event of a catastrophic IP infringement lawsuit?

I’m delighted to invite you to Aon’s IP Insurance Webinar for Czech & Slovakian Corporates on Wednesday, 17^th May at 10:00 – 10:45 AM. Our IP experts will elaborate on how to protect your company balance sheet from IP risks and utilize insurance to enhance enterprise value. The webinar is designed to discuss the main IP insuring clauses and will attempt to answer these questions to help you better understand the benefits and uniqueness of utilising IP insurance both to protect your bottom line and to enhance existing enterprise value. You will come away with a better knowledge of the IP insurance market and should feel more confident about building your own IP strategy.

I do hope you can join us and please register with the link below:

Register here for our IP Insurance Webinar on 17 May

If you require any further information, please contact Monika Petržílková (monika.petrzilkova@aon.cz)

CMS: European M&A Outlook, Boom and Gloom?

We are pleased to share with you the CMS 2023 edition of the European M&A Outlook, Boom and Gloom?

This tenth edition offers a comprehensive assessment of dealmaking sentiment in Europe’s M&A market and reflects the opinions of 330 corporates and PE firms based in Europe, the Americas and APAC, about their expectations for European M&A in the year ahead.

This year, against a challenging backdrop – economic headwinds, repercussions of the war in Ukraine, seller/buyer valuation gaps and a difficult financing environment – deal makers are remarkably bullish.

Key findings of the report include:

1. M&A expectations run high: 73% of deal makers expect the level of European M&A activity to increase over the next 12 months, compared to just 53% last year. Almost all respondents (88%) are currently considering M&A.
2. Undervalued targets and distressed sales to drive activity: The biggest buy-side driver of M&A is expected to be the availability of undervalued deal targets. On the sell-side, distressed situations are expected to be the biggest driver, cited by 26% of respondents.
3. Valuation gaps: seller/buyer valuation gaps are seen as the biggest obstacles to M&A.
4. Cost of financing to increase: As many as 87% of all respondents expect financing to be tighter compared with 2021 – this includes 45% who expect it to be much more difficult.
5. ESG rises up the M&A agenda: Some 90% of respondents expect ESG scrutiny in their dealmaking to increase over the next three years, compared to 72% in 2021’s survey.

1. TMT reigns supreme: Technology, Media and Telecommunications (TMT) is the sector predicted to see the greatest growth in dealmaking.

This year we have also added special editorial features including:

1. An analysis of ESG in M&A transactions
2. An examination of trends in M&A disputes
3. A spotlight on M&A in the Nordics

A short video with highlights of the study can be found HERE.

To study the report click here.

Polish Enterprise Fund VIII, a private equity fund managed by Enterprise Investors, will acquire a 36.3% stake in Modular System, the largest Polish manufacturer of multi-function container and modular systems.

• The value of the transaction was undisclosed;
• The transaction is conditional upon obtaining antimonopoly approval.

Modular System is the undisputed market leader in the production of multi-function turnkey containers and modular systems based on the steel frame technology – the winning solution for temporary non-residential structures (e.g. office buildings, portable staff facilities, military containers). In contrast to traditional construction methods, this technology enables swift, flexible deployment at a fixed cost. It also allows for a high degree of prefabrication.

Modular System’s products are reliable, have a wide range of applications and represent good value for money. As a result, the company is developing dynamically and enlarging its geographical footprint in response to the needs of new market niches. Since 2020 Modular System has reaped the benefits of having a well-equipped and highly efficient new production plant in central Poland. The company’s strong market position is reflected by its excellent financial results. Revenues reached EUR 30 million last year, while in 2021 the company plans to almost double that figure.

“Paweł Brudnicki and Mariusz Brudnicki, the company’s founders, are directly responsible for Modular System’s spectacular success. We are convinced that their entrepreneurial approach, extensive sector knowledge and broad experience will allow us to jointly make the best use of the favorable trends in the construction industry and the advantageous macroeconomic conditions,” said EI partner Michał Kędzia, who is responsible for this transaction. “We expect container and modular technologies to increase in popularity in the years to come, translating into a strong demand for this type of construction. We believe Modular System will not only strengthen its leading position in Poland but will become a regional champion,” he added.

“We are proud that our company has attracted a strong PE investor. Thanks to EI’s backing we now plan to grow at an even faster pace, both by entering new markets and by expanding our offering in those sectors and geographies in which we are already present,” said Paweł Brudnicki, CEO of Modular System.

“Enterprise Investors’ strong track record in the construction industry, including the prefabrication segment, was an important factor in our decision-making process. Together, we plan to replicate this success in the utility containers and modular systems sector,” added Mariusz Brudnicki, a vice president at Modular System, who is responsible for sales and business development.

Polish Enterprise Fund VI, a private equity fund managed by Enterprise Investors, has sold Wento, a leading Polish renewable energy company specializing in photovoltaic projects. The buyer, Equinor, is a broad energy company with activities in oil, gas, offshore wind and solar energy in more than 30 countries worldwide.

• The value of the transaction is EUR 100 million;
• Total gross proceeds generated by the investment amounted to EUR 139 million.

Building on experience gained during its investment in Polish Energy Partners (PEP), now Polenergia, in 2012 Enterprise Investors made another investment in the renewable energy sector when it founded Wento. EI invited a group of experienced managers to run the project, including Wojciech Cetnarski, PEP’s founder and former CEO. Initially Wento focused on wind energy projects but in 2016 pivoted toward the solar energy market. In total, Wento has developed 177 MW of photovoltaic projects to the stage of securing contracts for difference in the auction framework mandated by the Polish government. With a secured pipeline in excess of 1000 MW of further solar projects, the company is well equipped to meet Poland’s growing demand for renewable energy.

“Our investment in Wento has followed the changing fortunes of Poland’s renewable energy market.  The management team led by Wojciech Cetnarski has shown it can adapt and persevere in its goal of building a company that contributes meaningfully to the green transformation of Poland’s energy sector while making good returns for its investors,” said Michał Rusiecki, a managing partner at Enterprise Investors who is responsible for this transaction. “We are convinced that under the new ownership Wento will gain the resources needed to become an even more important contributor to the renewable energy market in Poland,” he added. 

Genesis Growth Equity Fund I (GGEF I), a fund focusing on smaller and mid-size high growth potential companies primarily in the Czech and Slovak markets, reached its hard cap size of € 40 million following the final closing of the Fund in December 2020 with additional commitments from SPM Capital and Sirius Investments.

Polish Enterprise Fund VIII, a private equity fund managed by Enterprise Investors (EI), will become the majority shareholder of Anwim, Poland’s largest independent operator of petrol stations trading under the MOYA brand. The company is also involved in fuel wholesale. Increasing EI’s involvement requires anti-monopoly approval.

Anwim was founded in 1992 by two entrepreneurs and initially it dealt solely with the wholesale of fuels. In 2009 the company launched retail operations under the MOYA brand and created an independent nationwide chain of petrol stations. Anwim is present in all Poland’s voivodeships, with outlets along the main transit routes and local roads as well as in towns and cities. In addition to petrol sales, the chain’s broad offer includes well-stocked mini stores, Caffe MOYA outlets selling food and coffee, car wash facilities and tailored services for business clients. MOYA leads the Polish market in terms of growth dynamics.

Enterprise Investors entered Anwim in 2018, when it had 180 petrol stations. Only in the first three quarters of this year the chain expanded by another 29 stations, and it is set to number c. 310 by the end of 2020. Last year, Anwim’s revenues amounted to EUR 900 million.

“We are very pleased that Mr. Witold Butkiewicz, Anwim’s founder, will remain a significant shareholder and chairman of the supervisory board. The last two years are irrefutable proof of how much can be achieved through harmonious cooperation between an entrepreneur and a private equity fund,” said Sebastian Król, partner at Enterprise Investors responsible for the investment.

Polish Enterprise Fund VIII (PEF VIII), a private equity fund managed by Enterprise Investors (EI), has announced a tender offer for 100% of PragmaGO, a provider of financial services to the SME sector. PEF VIII has secured the right to acquire from the majority shareholder, Pragma Inkaso, a stake that will give the fund 72.07% of votes at the general shareholders’ meeting. The maximum value of the tender offer is EUR 11.9 million.

• PEF VIII’s intention is to delist PragmaGO so it can continue its development in the private market;
• The subscription period for the tender offer will run from 16 December to 29 January 2021;
• The tender offer share price for the minority shareholders will be 35% higher, than for the majority shareholder. This price includes a 20% premium to the share price on the day preceding the tender offer announcement and is 37% higher than the average price of PragmaGO’s shares over the last six months;
• Once the tender offer is settled, EI plans to increase the company’s share capital by EUR 13.4 million at a price materially lower than the share price in the tender offer;
• If the required voting threshold is reached, the fund will take measures to squeeze out those among PragmaGO’s minority shareholders who did not respond to the tender offer.

PragmaGO operates in the non-banking financial market, offering customers such products as factoring and purchase financing and providing businesses with both working and investment capital. The company’s offer is tailored to the needs of small and medium-sized enterprises operating in Poland. By focusing its business model on automated online processes and distribution alliances with numerous partners, PragmaGO can offer customers a comprehensive range of solutions for improving their liquidity quickly and efficiently. After three quarters of 2020, PragmaGO held a portfolio worth EUR 21.2 million, had EUR 8.1 million of equity and EUR 0.4 million of net profit.

Dariusz Prończuk, the managing partner at Enterprise Investors responsible for the transaction, said: “Our aim is to delist the company from the Warsaw Stock Exchange. We believe that for PragmaGO to develop and make full use of the market’s potential it needs substantial capital injection, which we are willing to provide. In addition, we intend to support the company’s management with our broad experience from previous investments in the financial and technological sectors. All this can be achieved more efficiently and quickly once PragmaGO becomes a private company”.

To date, EI-managed funds invested EUR 322 million in 21 companies operating in the financial sector.

Abris CEE Mid-Market II LP fund, managed by Abris Capital Partners, the leading private equity investor in Central Europe, has signed an agreement to sell its stake in Cargounit, the largest independent locomotive lessor in Poland, to Three Seas Initiative Investment Fund (advised by Amber Infrastructure Group). Closing of the transaction is subject to the customary conditions precedent and is expected to take place by year-end.

Cargounit is the largest independent locomotive lessor in Poland, providing a comprehensive service offering, and is led by a highly experienced management team. Abris acquired a majority share in this company in May 2016 and subsequently invested additional capital for fleet expansion.

During Abris’ investment, the company has grown strongly, increasing revenues and profits more than threefold. Between 2016 and 2018, Abris helped drive this expansion through completing a staged acquisition of a large pool of locomotives, followed by targeted purchases of smaller fleets in subsequent years. During 2018-2020 the Company focused on investing in new fleet, including top-of-the-range locomotives, and completed a landmark, EU co-funded order for five brand-new multisystem locomotives specified for intermodal transportation.

Cargounit also implemented a number of key business initiatives focused on resilience of revenues and cash flows, as well as extension of its service offering. Many of these set new standards for the industry in Poland, increasing reliability and quality of service for key customers. Cargounit established itself as the clear market leader through prolonging and securing long-term contracts, extending its client base as well as its breadth of leasing options offered and introducing fleet management services. In addition, the business made significant improvements to its financing structure, successfully rebranded and implemented a dedicated fleet management IT system.

Edgar Koleśnik, Partner at Abris Capital Partners, commented:
“We are delighted with how Cargounit has grown, and especially how resilient this business has been this year. We are extremely proud to have created the largest independent locomotive lessor in Poland in strong cooperation with the founders and management team. We are pleased that the company can now go forward to the next stage in its growth with Three Seas Initiative Investment Fund (advised by Amber Infrastructure Group).

Wojciech Łukawski, Partner of Abris Capital Partners, added:
“It has been a pleasure to partner with Jacek Szczegodziński, Arkadiusz Ignasiak and Piotr Ignasiak – the founders of Cargounit – and the company’s management over the past four-and-a-half years. The progress that the company made was spectacular and we are proud to have been the part of that journey.”

Jet Investment is opening a new fund Jet Industrial Lease. Already third among the Jet funds, Jet Industrial Lease focuses on real estate. In the first year, Jet Investment wants to raise CZK 1 billion from private investors for the purchase and development of industrial and other real estates. Another CZK 14 billion should be raised within five years. The subscription period of the fund starts on November 1.

The Jet Industrial Lease Fund for qualified investors will focus primarily on the purchase of real estate from industrial companies, specifically creditworthy ones with a long-term perspective on the market. “We have been managing and developing industrial companies for more than twenty years. During that time, we have discovered that the industry offers considerable potential outside its core business, specifically in real estate management and development,” explains the Managing Director Igor Fait. He adds: “We know from our experience that performing effective asset management can become burdensome for a company, especially when it requires too much money or excessive effort and time. The thoughtful sale of its real estate property, on the other hand, can be a welcome financial injection for a company and a major impetus for the development of its core business. Also, Jet Investment can correctly evaluate the prospects of the future tenant and reflect his specific needs in the transaction.”

The Jet Investment team believes that it has found an ideal answer both for qualified investors, to whom it wants to bring high value with reasonable risk, and for the Czech industrial business. “Leaving the ownership, management and development of the property to a real estate specialist, while the business owner is only engaged in business, is quite common in Germany or Austria,” comments Libor Šparlinek, Partner in Jet Investment. “From a tax point of view, the building is depreciated for up to 50 years and the land is not depreciated at all, while the rent can be used as a cost item in each accounting period. Abroad, many companies have already understood this and prefer renting to ownership.”

Pavel Drabina, a new member of the Jet Investment team responsible for managing the real estate fund, assumes that during the first year the fund will invest an average of CZK 200–300 million in five properties respectively within Central Europe. “We are currently evaluating around 30 exciting acquisition opportunities, primarily from the industrial sector,” says the real estate team leader with 20 years of experience in real estate, project management and M&A, adding: “Real estate investing is irreplaceable in every investor’s portfolio, and not just as a hedge against inflation.”

The subscription period of the fund begins on November 1 with a minimum deposit of five million crowns; lower investments will be possible through the partner investment group Conseq[1]. The expected return of the open-end fund with an investment horizon of 5 years or more is expected to be 8% p.a.[2]. Four Jet Investment partners, including Igor Fait, will participate in it in the first year with a deposit of about 15%. The vision of the Jet Industrial Lease fund is to become a significant property owner throughout the European Union. “We are looking for acquisition opportunities mainly from the industrial sector, but also retail and office development, and although we initially want to focus on the Czech Republic and Slovakia, we are also looking at interesting opportunities in Germany, Austria and Poland,” concludes Drabina.

Jet Investment opens the Jet Industrial Lease fund after carrying out one of the most profitable divestments in the Jet 1 fund’s portfolio in recent years. For the Jet 2 fund, in which 170 private and institutional investors invested 4 billion crowns, the Jet team has so far acquired the TEDOM group, the company 2 JCP, and plans at least two more acquisitions by the end of next year.

[1] The fund is a fund of qualified investors; the minimum investment must meet the conditions for investment by a qualified investor.

[2] This is an estimate that does not guarantee future returns.

Investment in the customer proposition, management team and platform drives value creation

Allegro.eu (“Allegro” or “the Group”), a global top ten e-commerce platform and the leading and most recognised internet brand in Poland, completed its successful listing on the Warsaw Stock Exchange (“WSE”) today with its shares trading under the symbol “ALE”.  The listing, which was executed via a placing to both institutional and retail investors, represents the largest initial public offering (“IPO”) on the WSE to date. At the IPO price of PLN 43 per share, the implied market capitalisation is PLN 44 billion (€9.8 billion). 

Funds advised by Cinven, Permira and Mid Europa Partners (together “the Sponsors”) acquired Allegro.eu in January 2017 for US$3.25 billion (€2.75 billion). The value creation strategy involved investing in the experience and convenience of Allegro’s services to both consumers and merchants.  Initiatives included the development of a best-in-class mobile app, improved logistics solutions and pricing tools, and the launch of Allegro SMART! –  the subscription-based loyalty program whose subscriber base has grown to 2.1 million subscribers at 30 June 2020. 

The impact of these initiatives, under leadership of Allegro’s Chairman Darren Houston, CEO François Nuyts and the enhanced management team recruited to the Group, has been significant.  Over the lifetime of the Sponsors’ investment, GMV grew by 99%, net revenue by 102% and adjusted EBITDA by 113% on a last-twelve month (“LTM”) basis.  Most recently, GMV growth increased further to 54% (LTM to 30 June 2020) as consumers turned to Allegro to provide them with goods during the ongoing COVID-19 pandemic.

In addition to the significant business growth and value creation, Allegro has seen a substantial increase in employees from 1,380 at the end of 2016 to nearly 2,300 as at 30 June 2020.

Due to the strength of investor demand the original offer of shares was up-sized, with c. 182.6 million shares sold by the Sponsors in the IPO (in aggregate), raising PLN 7.85 billion (€1.76 billion) while retaining an aggregate equity stake in the Group of c. 73% post-listing (before exercise of the over-allotment option).  Should the over-allotment option be fully exercised, the Sponsors will realise a further PLN 1.38 billion (€308.72 million).

Commenting on the IPO, David Barker, Partner of Cinven said:

“When we originally invested in Allegro in 2017, it was a good business with a good reputation. We brought in a new management team, led by the highly experienced Chair, Darren Huston, and CEO, François Nuyts. Together with management and our co-shareholders, we focused on improving the experience for both customers and merchants on the platform and created the ongoing improvements evident in the operating metrics and financial performance of the business. As a result, Allegro is now a great business with an excellent reputation and has an exciting outlook for future growth.”

Richard Sanders, Partner of Permira added:

“Over the last four years, Allegro has grown from strength to strength. With a long-term growth mindset, the company has continued to make significant investments in headcount and technology to improve the consumer and merchant experience. This has spanned everyday retail basics – such as lowering prices and broadening selection – to longer-term strategic bets like Smart!, which are fundamentally transforming the quality of the online shopping experience in Poland. Today marks the next step in the company’s growth trajectory, and we are very excited to continue working with Darren, Francois and the management team.”

Paweł Padusiński, Partner and Head of Warsaw Office of Mid Europa Partners added:

“Allegro’s success story is one of the best testimonies to Mid Europa’s strategy focused on supporting the leading consumer facing businesses in Poland and Central Europe. During our investment in Allegro, we have provided our local investor perspective to the Board and, through our Warsaw based team, have worked closely with Allegro’s highly talented and motivated management. Jointly with our partners, we have helped develop Allegro into a Top 10 global e-commerce marketplace. I am very pleased that this CEE success story was recognized by so many reputable institutional and retail investors. Allegro can now start its new growth chapter as a public company, after having completed the largest ever IPO on the Warsaw Stock Exchange.”

Lazard & Co., Limited acted as Independent Financial Advisor; Goldman Sachs International and Morgan Stanley & Co. International plc acted as global coordinators and joint bookrunners; Barclays Bank PLC, BofA Securities Europe SA, Citigroup Global Markets Limited and Dom Maklerski Banku Handlowego S.A. as joint bookrunners; Santander Bank Polska S.A and BM PKO BP as joint bookrunners and co-offering agents in Poland in connection with its offer to retail investors;  Bank Polska Kasa Opieki Spółka Akcyjna, Crédit Agricole Corporate and Investment Bank, Erste Group Bank AG, Pekao Investment Banking S.A. and Raiffeisen Centrobank AG, as co-lead managers.

Clifford Chance acted as legal counsel to the Issuer; Allen & Overy acted as legal counsel to the underwriters; Greenberg Traurig Grzesiak acted as legal counsel to the underwriters with respect to legal matters of Poland and on the admission of Allegro shares to listing on the Warsaw Stock Exchange; PwC acted as reporting accountant; E&Y acted as tax advisor; FTI Consulting LLP and NBS Communications provided strategic communications advice to Allegro.eu internationally and in Poland, respectively.

Polish Enterprise Fund VIII, a private equity fund managed by Enterprise Investors (EI), will invest EUR 25 million in Software Mind, a Polish provider of software development outsourcing services.

• Software Mind is an operating division of Ailleron, a company listed on the Warsaw Stock Exchange. As part of the transaction it will be carved out from the parent company, subject to approval at Ailleron’s extraordinary general meeting;
• The transaction will consist of a EUR 9 million buyout of 26.7% of Software Mind shares from Ailleron and a EUR 16 million capital increase, which in effect will raise PEF VIII’s stake in the business to 50.2%.

Software Mind is a Polish software company founded in 1999. It develops comprehensive (end-to-end) software solutions for high-profile clients that include PE-backed financial and technological industry leaders as well as Silicon Valley unicorns. Among Software Mind’s many clients are companies from the fintech, healthcare and high-tech sectors from the United States, Great Britain and Scandinavia, as well as the four largest mobile operators in Poland and a few that are based abroad. The management team is led by its original founder and represents a well-balanced mix of commitment, seniority and technical expertise.

The company operates out of four development centers across Poland: in Kraków, Rzeszów, Warsaw and Bielsko-Biała, and employs 370 IT professionals. Software Mind establishes long-term partnerships with clients, helping them to scale their dynamically growing businesses. It has a strong track record in supporting the digital transformation of companies around the world by merging with their in-house R&D teams and working on product development as well as new channels of communication with the clients’ customers.

Software Mind has historically achieved very dynamic growth, both by acquiring new accounts and by increasing the scale of business with existing ones. The growth continues this year, as confirmed by record high account acquisition and strong year-to-date results, with sales reaching EUR 15 million after first nine months of 2020.

“The company’s long-term goal is to deliver specialization at scale, by providing high-level expertise in several industries or technologies”, said Rafał Bator, the partner at Enterprise Investors responsible for this investment. “I am convinced that the planned capital increase will enable Software Mind to quickly obtain new competencies and markets, also through add-on acquisitions. We plan to grow the company exponentially, and I think the expertise we have gained by investing in companies that are great examples of the buy-and-build strategy, such as AVG Technologies, BLStream and intive, will also come in handy”, he added.

Polish Enterprise Fund VII (PEF VII), a private equity fund managed by Enterprise Investors (EI), has signed an agreement to acquire the remaining 35% stake in PAN-PEK, a leading bakery producer and retailer in Croatia.

• EI agreed with Mr. Ivan Parać, the founder of PAN-PEK, to buy out his stake;
• PEF VII originally bought a 65% stake in the company in May 2018. Upon completion of the transaction, PEF VII will become 100% owner of PAN-PEK;
• The value of the transaction was not disclosed;
• The completion of the transaction remains subject to obtaining the customary anti-monopoly permit.

PAN-PEK was established in 1992 and is one of the biggest producers of frozen bakery products in the Adriatic region. The company serves modern grocery retailers in Croatia and operates its own 65-store chain of bakery outlets, predominantly in the Zagreb area but with a growing presence in other cities and larger towns as well as along the Adriatic coast. PAN-PEK sells a variety of breads, baguettes and sandwiches through grocery retailers and its own chain. It has been continuously developing its range in the past two years so as to offer its customer base the best products. The main factory is in Zagreb, with a second smaller plant located in Dakovo, Eastern Croatia.

“We would like to thank Ivan Parać for our partnership over the last two years. Mr. Parać is a highly experienced and skilled entrepreneur and under his management PAN-PEK has continued to acquire new customers and add new outlets to its retail chain, thus leading the company to achieve a record level of EUR 36 million of sales in 2019. We will carry on his efforts to strengthen PAN-PEK’s leading position in the Adriatic region under the leadership of the current CEO, János Király,” said Enterprise Investors partner Michał Kędzia, who is responsible for the investment.

Alexander Kosovský (34) joins Jet Investment as Director / Investment Projects. He will be responsible for the identification of investment opportunities for the Jet 2 Fund. “I am joining the team of Jet Investment at a dynamic time when, due to the economic turbulence of the past year in the Czech Republic and abroad, many exciting opportunities are opening up for investors. In the Jet 2 fund, almost three billion crowns are available for purchases, which we want to allocate to two to four projects,” Kosovský comments. “We see several attractive acquisition targets on the market that fit well into the funds’ investment strategy.” Alexander’s prior experience includes a position with Genesis Capital, where he was responsible for the identification of investment opportunities across industries in the Czech Republic, Slovakia and Poland. As Investment Manager, he led two investments – POS Media and Stangl Technik Česká republika/Stangl Technik Polska.He started his career in investment banking divisions at the Royal Bank of Scotland and J.P. Morgan in London and in transaction advisory at Ernst & Young in Prague, later he worked as an investment advisor for a major international industrial group. Alexander studied Economics and Finance at Queen Mary College in London and holds the CEMS Master in Management degree from HEC Paris and the University of Economics in Prague. He speaks Czech, English, Russian and French.

Genesis Capital, one of the largest private equity groups in Central Europe, is preparing to launch a new fund, Genesis Private Equity Fund IV (GPEF IV); the sixth private equity fund of Genesis Capital in the 20 years since its establishment. In a similar manner to its predecessors, GPEF IV will also focus on investments into small and medium-sized enterprises with high growth potential in the Czech Republic, Slovakia, Poland, Hungary and Austria. The fund’s target size is EUR 150 million and its first closing is expected at the beginning of 2021.

“We are pleased to be able to contribute to the development of businesses in the Czech Republic, Slovakia and neighbouring countries of Central Europe through our private equity funds. We believe that GPEF IV will facilitate growth of at least a dozen Central European companies that will be interested in this type of equity financing,” says Jan Tauber, Chairman of Genesis Capital Equity. “We want the new fund to replicate the attractive performance of our previous funds,” adds Jan Tauber.

“GPEF IV will invest in established companies with a strong growth potential, typically in situations where successful founders are considering suitable successors, or are looking for capital to grow their businesses, expand internationally or invest in innovations, or alternatively in cases where multinational groups looking to divest their non-core business units are searching for a suitable partner. We see a number of opportunities in this segment of the market which itself is growing and becoming more regional, so we decided to launch a new bigger fund to support them” says Ondřej Vičar, Managing Partner at Genesis Capital Equity. When speaking about GPEF IV’s strategy, he notes that “the fund will invest across a wide range of industries, but with preference for sectors where Genesis Capital funds have had a strong historical track record, such as B2B services, light and medium manufacturing, IT services and specialised retail and consumer services.”

Regarding its sixth private equity fund, Genesis Capital will follow the same investment strategy that has proven successful in the past. “We identify suitable investment opportunities using several basic criteria,” explains Radan Hanzl, Partner at Genesis Capital Equity. “First and foremost, the company must have a strong growth potential and demonstrate the ability to formulate and successfully execute its plans. A competent and experienced management team is another highly important factor. We rely on partnership with top executives of the portfolio companies. They usually invest alongside us and share the up-side as well as the risks of the investment,“ adds Radan Hanzl.

“Launching and developing a new fund is a great professional opportunity. We believe that despite the current situation, there are numerous companies with experienced management teams and the ambition of developing their business to a higher level that are at the same time able to efficiently use private equity capital. Our professional investment team at Genesis Capital is ready and looking forward to take on the challenge,” concludes Tatiana Balkovicová, Senior Investment Director at Genesis Capital Equity.

Through its fund of qualified investors Jet 2, the Czech-based investment company Jet Investment has acquired a 70% stake in 2 JCP, a company with a production plant in the Czech Republic and sales and technical branches in the United Kingdom and the USA. The Jet 2 Fund plans to further develop the successful supplier of filtration and acoustic solutions for leading gas turbine manufacturers and make use of synergic effects with other companies from its energy platform.

2 JCP employs a total of 315 employees in three countries and achieved approximately CZK 100 million in EBITDA last year. “In the first phase, the Jet 2 fund bought a 70% stake from three Czech owners, but we count on an option to buy another approximately 15% to present itself within four to five years. The remaining 15% will remain in possession of the group’s key managers,” explains Marek Palička, the project director in Jet Investment. At the same time, two of the three current Czech shareholders will remain active members of the management and will actively participate in managing and developing the company. “I took 2 JCP over from my father, who built the company from scratch. After 26 years of successful leadership, however, it is time to sceptre and find a partner with enthusiasm and sufficient resources to ensure the further growth and stability of the company. I have full confidence in Jet Investment. I believe that it will continue the work we have started, and in which I will continue to participate myself as a minority owner and manager,” comments the original majority shareholder Jan Pačes on the decision to sell his share.

In the usual fashion, Jet Investment is going to develop the company. “2 JCP has a high-quality management team that has been able to build a prosperous and robust company supplying products to the world’s largest OEMs. By combining their experience and our know-how, we will strive to strengthen 2 JCP’s position on the gas energy market,” comments Igor Fait, partner and founder of Jet Investment, on the acquisition of a company, the revenues of which have been growing at a double-digit rate in recent years. His team also plans to implement appropriate elements of a corporate governance structure to better correspond to a company operating in three countries on two continents.

Roklen Corporate Finance was an advisor during the entire sales process.

2 JCP with its headquarters and production plant in Račice and sales and technical branches in Great Britain and the USA was established in 1992. 2 JCP is a global supplier of equipment for gas turbines, submarine systems and pressure pipes, food and packaging structures. It supplies its products and services to 50 countries around the world and also has engineering offices and manufacturing facilities in North America, Europe and Asia. The company helps its customers achieve better performance and reliability through innovative air filtration, temperature and noise control solutions.

Polish Enterprise Fund VI, a private equity fund managed by Enterprise Investors, has sold its remaining 34.4% stake in Novaturas, the largest tour operator in the Baltic States, through a series of secondary transactions on Nasdaq Baltic. The transactions generated gross proceeds of EUR 4.9 million.

Novaturas was established in 1999 and soon became the most widely recognized tour operator in the Baltics. In 2007, Enterprise Investors acquired a 71% stake in the firm investing in its further growth. The company’s first-rate reliability and reputation, together with the Baltic States’ good macroeconomic position and growing consumption, have helped Novaturas become the number one market player in the region. Today it is the leading tour operator in Lithuania, Latvia and Estonia, both in terms of sales value and passenger volumes.

The company uses diverse and complementary distribution channels – it works with over 400 travel agencies, including all the major ones in the Baltics and more than 60 in Belarus. Novaturas also operates its own stores in Lithuania, Latvia and Estonia, and is developing an e-commerce channel. In 2019, the company reached EUR 179.9 million in revenues, with EBITDA of EUR 4.4 million.

On May 1, 2020, the Act No. 119/2020 Coll., which concern various legal regulations in the area of regulating business on the financial market, will enter into force. This Act, among other things, significantly amended Act No. 240/2013 Coll., on Management Companies and Investment Funds.

https://www.mfcr.cz/en/themes/capital-market/capital-market-in-the-czech-republic/new-english-translation-of-the-act-on-ma-38401

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Mid Europa Partners (“Mid Europa”), the leading buyout investor focused on the growth markets of Central and Eastern Europe, announced today the agreement to merge its portfolio company, CMC İletişim ve Çağrı Merkezi Hizmetleri A.Ş. (“CMC”), with Meritus Upravljanje d.o.o. (“M+ Group”), in return for a 30% equity stake in the combined group. M+ Group is a regional business process outsourcing service (“BPO”) provider and is a subsidiary of the company Meritus ulaganja d.d. (ZSE: MRUL), and CMC is the largest independent outsourced call centre and customer management services provider in Turkey with more than 4,000 employees. Following completion of the transaction, M+ Group is expected to emerge as the leading regional contact centre and business process outsourcing services provider in South Eastern Europe (“SEE”).

Kerim Turkmen, Partner of Mid Europa commented: “We are delighted to become a shareholder in a significantly larger and diversified regional operator. We believe in the long term growth prospects of the BPO industry in our region and globally and are committed to our future cooperation with M+ Group in creating the leading regional BPO services provider. The focus of the combined business will be on serving the most demanding international blue chip clients.”

Zvonimir Mrsic, President of the Supervisory Board of M+ Group commented: “The strength of the new group is reflected in the fact that this transaction makes us one of the largest private employers in Croatia, with more than 7,000 employees. M+ Group will now serve more than 220 clients in 58 countries worldwide, generating an annual turnover in excess of EUR 65 million. Our international expansion continues with a focus on the acquisition of new global clients and the export of services as we contribute to the economic prosperity of Croatia and the region as a whole.”

The transaction is expected to complete by the end of January 2020.

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Polish Enterprise Fund VII, a private equity fund managed by Enterprise Investors (EI), has signed an agreement to sell Danwood, the number one manufacturer of prefabricated turnkey houses in Germany and Poland. The buyer – GS Engineering & Construction – is one of the biggest construction companies in South Korea.

• The value of the transaction is EUR 140 million;
• Total gross proceeds generated by the investment amount to EUR 238 million, yielding a 9x total gross multiple of cost;
• The transaction is conditional upon obtaining antimonopoly approval in Poland.

Danwood, headquartered in Białystok and with two production plants in Bielsk Podlaski, designs and builds ready-to-move-in houses for individual customers. In December 2013, EI acquired the company in a carve-out transaction from Budimex SA. In the year of the investment Danwood delivered 685 houses, generating revenue of EUR 99 million. By the end of 2019, the company’s production capacity reached 2,000 houses and revenues exceeded EUR 274 million.

Between 2014 and 2019, Danwood invested over EUR 27 million in expanding its production capacities. The workforce more than doubled in this period, numbering more than 2,000 employees by the end of 2019. The company operates in five European countries, including Germany, where for the last four years it has been the top player in its market. With its comprehensive portfolio and value-for-money solutions Danwood is a one-stop shop for prospective homeowners looking to buy a turnkey house in the mid-range segment – the most attractive part of the market in terms of size and growth dynamics. Thanks to its best-in-class production facilities, construction site teams, engineering staff and architects, Danwood will continue to grow on the back of the prevailing market trends.

„It was a real pleasure to work with Danwood’s management team led by Jarosław Jurak” said Sebastian Król, the partner at EI responsible for this investment. „ogether we have built a company that not only surpassed the market in terms of growth, but tripled production capacity, developed a unique and effective approach to sales and achieved operational excellence that will fuel this growth in years to come,”, he added.

Commenting on the transaction, Jarosław Jurak, president and CEO of Danwood, said: „We strongly believe that under the new ownership Danwood has the potential to further strengthen its market position in Europe and reach for new markets outside the EU, becoming a global leader in the production of energy-efficient prefabricated houses.”

The Czech investment company Jet Investment has concluded a contract to sell its 100% stake in MSV Metal Studenka to MORAVIA STEEL. The steelmaking company is among the most important industrial groups and steel producers in Central Europe with substantial activities in the forging industry. The terms of the agreement are not being disclosed.

The agreement marks another successful divestment from the portfolio of Jet 1 fund after recent sales of LESS & TIMBER and BENET AUTOMOTIVE.

“The selling of MSV Metal Studenka to a strategic partner is a successful outcome of our restructuring efforts that we have been making for the last seven years. In the course of our management, the insolvent company has become a clear market leader in the forgings and subassembly for railways in Europe. Since our entry, we have doubled the profits and revenues of the entire group,” says Marek Malík, Partner in Jet Investment. “We have accepted the offer from MORAVIA STEEL mainly because we believe that joining MSV Metal with a respected steel producer and a major player in the forging industry will enable this company to grow further.”

Jet Investment Project Director Jan Sklenar said: “We are handing over a platform in excellent condition, strengthened by investment and with a full order book for the next period.” The group consists of the Czech MSV Metal Studenka, a. s. as well as Polish Kuźnia Ostrów Wielkopolski Sp. z o.o. In addition to the current organic growth, it was the purchase of a Polish competitor in 2017 that brought a significant positive development of economic indicators thanks to the synergies between the two companies. Besides, Jet Investment invested heavily in products and technologies during the holding of MSV Metal Studenka. Since 2013, the investments have amounted to EUR 15 million.

MSV Metal Studénka, the direct successor of Vagonka Studenka, is a comprehensive manufacturer of forgings and components for rail vehicles. It is one of the largest suppliers to the railway industry in Europe with a history dating back to 1900. Significant customers include all renowned European state railways such as DEUTSCHE BAHN AG, ÖBB, SNCF, SNCB, CD, RENFE, and some non-European railways such as TCDD, ONCF, SNTF, and more. MSV Metal Studenka also supplies its components to all major European freight wagon manufacturers.

Together with dozens of subsidiaries, MORAVIA STEEL is an important industrial group in Central Europe and the most significant Czech steelworks with domestic capital. It exports its products to more than 60 countries on all continents.

PwC Czech Republic provided advisory services to the seller in this transaction; legal services were provided by DRV Legal.

Mid Europa Partners (“Mid Europa”), the leading private equity investor in Central and Eastern Europe, announced today the agreement to sell Walmark a.s. (“Walmark” or the “Company”) to STADA Arzneimittel AG (“STADA”). The transaction is subject to customary anti-trust clearance and is expected to close in Q1 2020.

With a unique portfolio of iconic brands and direct presence across nine European Union countries, Walmark is the leading consumer healthcare company in Central and Eastern Europe.

Matthew Strassberg, Co-Managing Partner of Mid Europa commented: “The acquisition by STADA validates Walmark’s transformation from a family-led business to an international platform. Working in partnership with new management team, we have achieved our original vision for the Company and created a valuable strategic asset by developing and implementing a thorough approach to operational excellence and focused product innovation. We would like to thank Walmark management and employees for their dedication and contribution over the past several years. We are confident that with the benefit of the resources of STADA, a global healthcare company with a 120-year history, Walmark will continue in its track record of success in our region and beyond”.

Miro Slezak, CEO of Walmark, commented: “This transaction recognizes the value of Walmark’s unique brands as well as strong organization attracting some of the best talent across our markets. We are very pleased to be joining STADA, as we share a common purpose of supporting our customers to live healthier lives and we are excited for the new opportunities for our employees as part of a larger company. We are grateful for Mid Europa’s support and strong commitment to the Company’s long-term strategy throughout their investment”.

Viktoria Habanova, Principal of Mid Europa who covers the Czech and Slovak markets said: “Mid Europa’s investment in Walmark as well as other successful partnerships with market-leading management teams and entrepreneurs in the Czech Republic and Slovakia, such as Karneval, CRa, and Alpha Medical, illustrate our on-going commitment to these markets where we have invested over €1 billion over the past 15 years”.

The transaction execution was led by Viktoria Habanova with the support of Tomas Vrba and Rustam Kurmakaev.

Rothschild & Co acted as exclusive financial adviser to Mid Europa, Weil Gotshal & Manges with the support of White & Case and AK Jan Evan as its legal counsel, PwC as transaction services adviser, and Boston Consulting Group as its commercial adviser.

Source: MID EUROPA

Polish Enterprise Fund VII (PEF VII), a private equity fund managed by Enterprise Investors (EI), announced today that it has signed an agreement to sell 3S, a provider of fiber-optic and data center services for B2B clients, to P4, one of the leading telecom operators in Poland.

• The enterprise value of the transaction is EUR 96 million;
• The transaction is conditional upon obtaining antimonopoly approval.

3S is the owner and operator of a 3,800km-long, best-in-class fiber-optic network connected with a geographically diversified Tier 3 data center cluster. The company operates in a rapidly growing market segment, offering tailor-made telecommunication solutions that include internally developed cloud services to more than 2,800 B2B clients in Poland. It employs over 250 people. In 2015, EI acquired a 76% stake in the company for EUR 21 million. In 2018, 3S generated EUR 20 million in revenues.

“3S is ideally positioned to benefit from the growing demand for data services and the need for high-speed networks in Poland’s metropolitan areas. The company has a strong track record of servicing B2B clients, and its experienced management team is well equipped to drive the company’s growth under the new ownership. I am convinced that 3S will make a fine addition to P4’s offering”, said Rafał Bator, partner at Enterprise Investors responsible for the investment.

Source: Genesis Capital