Genesis Growth Equity Fund I reached its hard cap size of € 40 million.

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.

“We are pleased to announce completion of the fundraising of Genesis Growth Equity Fund I with a final close reaching € 40 million thanks to support of number of reputable institutional LPs. The Fund was despite current challenging market conditions oversubscribed with the investor commitments reaching the hard cap amount.” comments on the successful fundraising of GGEF I Jiří Beneš, Managing Partner at Genesis Capital Growth.

“Regardless of last year being quite a difficult period for M&A transactions, we managed to close the first investments of GGEF I into two well-performing companies – R2B2 and Home Care Promedica. We look forward to deploying the Fund in the coming years as we see a number of high-growth potential businesses. These often face the issue of succession to the founders but are capable of using development capital efficiently.” added Radim Jasek, Partner at Genesis Capital Growth.

Genesis Growth Equity Fund I will invest equity tickets of up to € 4 million into established companies with a significant growth potential mainly in the Czech Republic and Slovakia, which plan on expanding their operations, grow internationally or invest into innovations. The GGEF I team sees a large number of exciting opportunities in this market segment and will provide entrepreneurs and companies with additional capital and support to back their business expansion.

During 2020 the Fund already completed its first two investments when it acquired majority stakes in R2B2, a leading provider of programmatic advertising services in the Czech Republic, and Home Care Promedica, an established provider of professional home health care services mainly in the Prague area.

0100 Virtual CEE_The 2nd Edition of PE & VC Virtual Conference in the CEE Region 16-18/3/2021

0100 Conferences are pleased to invite you to the 2nd edition of their Private Equity & Venture Capital virtual conference in the CEE region- 0100 Virtual CEE scheduled for 16-18 March 2021. You can look forward to more than 500 industry professionals including 300+ investors interested in the CEE region. 

You will have a chance to get insights from speakers like: 

•Tomasz Ciborowski, Partner at Enterprise Investors 

•Rustam Kurmakaev, Principal at Mid Europa Partners 

•Paweł Czupryna, Head of Fundraising at Mount TFI 

•Andrzej Bartos, Senior Partner at Innova Capital 

•Brian Wardrop, Managing Partner at ARX Equity Partners 

•Jan Brávek, COO at Jet Investment 

•Michal Rybovič, Partner at Sandberg Capital 

•Michal Tománek, Investment Director at KKCG Group 

•Ondrej Bartoš, Partner at Credo Ventures 

•Kinga Stanisławska, General Partner & Founder at Experior Venture Fund 

•Andris K. Berzins, Managing Partner at Change Ventures 

•Stephane Gantchev, Partner at LAUNCHub Ventures 

•Piotr Sliwa, Investment Director at 3TS Capital Partners 

•Marcin Szeląg, Partner at Innovation Nest 

•Tomas Kemtys, Partner at Contrarian Ventures 

•Evgeny Angelov, Managing Partner at Silverline Capital 

•Maximilian Schausberger, Managing Director at Elevator Ventures 

•Venelin Dimitrov, Partner & Co-Head of the M&A practice at Tsvetkova Bebov Komarevski 

•Barbara Nowakowska, Managing Director at PSIK 

and others. 


Panel discussions cover topics such as Fundraising appetite in the Region, LP perspective on opportunities & new market trends, PE firms dealing with post pandemic situation, VC investing in the region and many more. 

Are you a Limited Partner or General Partner? 

Then you can register with a complimentary ticket HERE

 

Enterprise Investors increases its stake in Anwim

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.

 

Live panel discussion| Impact Investing: New businesses for the future

CVCA and Deloitte cordially invite you to join a live panel discussion Impact Investing: New businesses for the future. We will focus on investing in projects which are financially sustainable and, in the same time, have positive social or environmental impact.

When: 4/12/2020.    2 p.m.

Panelists

Silke Horák, Co-founder & Partner, Tilia Impact Ventures,
Cyril Gouiffès, Head of Social Impact Investments, EIF
Philip Staehelin, Founder & CEO, DOT Glasses
Petr Báča, Founder & CEO, MIWA

Moderators

Zuzana Picková, CEO, CVCA
Dušan Ševc, Partner, Financial Advisory, Deloitte

Live stream here:

https://akce.deloitte.cz/watch/?m=M7KpdQJPXdo

Live panel discussion| Impact Investing: New businesses for the future

CVCA and Deloitte broadcast a webcast on Impact Investing: New businesses for the future on 4.12. 2020. The practical experience with a business with a positive social or environmental impact, that this business is not philanthropy, but on the contrary must also be economically sustainable, was discussed by:

Panelists

Silke Horák, Co-founder & Partner, Tilia Impact Ventures,
Cyril Gouiffès, Head of Social Impact Investments, EIF
Philip Staehelin, Founder & CEO, DOT Glasses
Petr Báča, Founder & CEO, MIWA

Moderators

Zuzana Picková, CEO, CVCA
Dušan Ševc, Partner, Financial Advisory, Deloitte

You can watch the webcast recording here:

 

Abolishment of share sales income exemption to affect PE&VC transactions

Representatives of private equity and venture capital funds perceive very negatively the proposal of Deputy of the Parliament Mikuláš Ferjenčík to abolish the exemption from taxation of income from the sale of securities exceeding 20 million CZK. There is significant concern among investors about unrealistic price expectations of sellers, as they may be forced to account for the increased tax burden within them.

According to the adopted (non-governmental) amendment, the exemption of an individual’s income from the sale of a security (including the master certificate), resp. income from the share attributable to the investment certificate upon cancellation of the share fund, should be newly limited to the amount of 20 million CZK per taxable period. With regard to the absence of a special transitional provision, it is therefore possible that income from the sale of securities paid to an individual in 2021 will already be subject to a new taxation regime, even though the underlying securities were acquired by the end of 2020. Moreover, the proposed change would also affect the already closed transactions, as a substantial part of them has a so-called deferred purchase price payment depending on future economic results in a few years after the sale.

The CVCA very negatively assesses the fact that the proposal was neither discussed with the business experts, nor is in conflict with the proposals for capital market development resulting from the National Strategy for Capital Market Development, which had been approved last year. Furthermore, the proposal did not obtain a recommendation of the Budget Committee of the Chamber of Deputies of the Parliament of the Czech Republic. The preservation of the time test had also been recommended by the World Bank Report on the Development of the Capital Market in the Czech Republic, which the National Strategy has drawn upon.

At the same time, the members of the CVCA are afraid of interpretive ambiguities and potential risks when structuring transactions, as well as of the short time between the presumed approval and the real effectiveness. “Any random and non-systemic taxation amendment brings major problems for the funds. The CVCA has long been calling for the predictability of the tax environment, and this proposal is in sharp contrast to this requirement. The objective of the governmental policy should be to support the financial sector, which works with high added value and supports Czech growth and innovative companies, not its destabilisation” says Jiří Beneš, CVCA President, in his comment about the proposal.

Private equity funds are increasingly buying companies from their founders and, thereby, help them resolve the problem of succession. Such companies have been run by individuals / families for decades and they, in good faith, presumed that the yield from selling their businesses would be generally exempt of tax. The limit of 20 million is very low in this context. Only small companies are purchased within this price range, which are currently targeted by only a minimum of private equity funds. The proposed changes would have a considerably negative impact on the structuring of transactions and on purchase prices. At the same time, these family businesses are by nature businesses with a high added value

and have significant potential for further growth in the future. Besides this, sellers – shareholders would be entirely unjustifiably disadvantaged as opposed to sellers – associates of private limited companies, or other types of companies which do not issue their shares in the form of securities. It is this aspect where it is possible to see another inconceivability of the entire amendment concerning these incomes. Moreover, the wording of the amendment in question raises a number of other ambiguities, for example, whether the limit applies to the seller’s total income from the sale of all securities (shares) in the given year or to an individual income, or income from an individual security (i.e. the income from every share), or what part of the income in the given period will be exempt.

The venture capital funds, and founders and owners of start-up companies respectively, represent another negatively affected group as start-ups usually take the form of joint stock companies. Innovative technological funds should, on the contrary, be supported by the state, resp. they should not be unnecessarily hindered. The long-term objective of the state, especially today, should be the maximum support for technological development and innovative businessmen who take an active part in it by creating favourable conditions for products and services with high added value.

One can only hope that this conceptually inconsistent (non-governmental) amendment, which should be discussed in the Senate in mid-December 2020, will be reworked by the Senate and returned the Chamber of Deputies for comment.

You can also find information on this issue from our members here:

https://www.samak.cz/samak-life/aktuality/blizi-se-konec-danove-zajimavych-transakci-s-akciemi-akciovymi-spolecnostmi-

2https://nazory.ihned.cz/komentare/c1-66852910-komentar-partnera-kpmg-danovy-dort-s-piratskou-prichuti-jsou-pirati-jen-sexy-komuniste-s-internetem

Enterprise Investors announces tender offer for 100% of PragmaGO

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 exits locomotive leasing business

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 launches a subscription period of a new fund for qualified investors focused on industrial real estate on November 1

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.

Allegro.eu IPO commences trading on the Warsaw Stock Exchange

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.