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Oct 29, 2009 17:23 EEST
October 29 (SeeNews) - Private equity investment firm Mid Europa Partners expects to invest more than 3.0 billion euro ($4.5 billion) in Central and Eastern Europe in the next two to three years, senior company officials said.
Mid Europa has offices in London, Warsaw and Budapest. Currently, the firm’s three funds have some 2.3 billion euro in deployed equity under management in the region. The funds also have a further 1.0 billion euro available for investment.
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Robert Knorr, partner at Mid Europa, said: “We expect that the still available equity from our third fund, in combination with debt financing and participation from our co-investors which we have a long track record of harnessing, would give us the firepower to do further transactions in excess of 3.0 billion euro across the CEE region.”
“We would aim to deploy our remaining capital on an opportunistic basis over the next 2-3 years,” Knorr told SeeNews in an e-mailed interview.
Earlier this month Mid Europa Partners wrapped up its latest acquisition in Southeast Europe - Bulgarian direct-to-home (DTH) satellite pay TV operator Interaktivni Tehnologii AD (ITV). Furthermore, Mid Europa started a series of transactions last month that aim to complete the take-over of Hungarian telecommunications and broadband operator Invitel Holdings A/S.
Mid Europa's cable and broadband portfolio in Southeast Europe comprises Serbia Broadband (SBB), which offers a variety of cable TV, broadband Internet and DTH services in the Adriatic region; UPC Slovenia, the leading Slovenian cable and broadband operator, which was acquired in July; and now also ITV.
Stefan Tzvetkov, Associate Director at Mid Europa, told SeeNews: “Through TotalTV, SBB’s regional DTH platform, which is present in the PayTV markets of Slovenia, Croatia, Serbia, Montenegro, Bosnia, and Macedonia, our management team is well positioned to monitor and capitalize on opportunities to build further on this footprint, both in Slovenia and across the region.”
Knorr said: “Based on our broad experience across CEE we would anticipate to see the first investment opportunities in these regions to emerge in the media and telecommunications, healthcare (including pharmaceuticals), and energy/utilities sectors as these sectors typically undergo faster industrial transformation and consolidation which requires new capital.”
Knorr added the firm's investment approach also covers a broad range of other sectors including general manufacturing and materials, chemicals, and consumer goods and retail.
Mid Europa Partners (www.mideuropa.com) acquired Croatia’s Calucem, one of the world's leading manufacturers of calcium alumina cement, from Heidelberg Cement in June 2006. Calucem Group has production facilities in Croatia's Adriatic town of Pula and sales offices in Germany, the U.S. and Singapore.
Knorr said the firm does not provide forward looking comments regarding potential investments: “We are actively monitoring and working on potential new investments in most of the CEE markets."
“We typically hold our investments for an average period of five years and would not see Calucem or SBB as an exception to that rule of thumb,” Tzvetkov said, referring to the firm's exit strategy.
Yet, he added, the company has demonstrated in the past its ability to be flexible when attractive exit opportunities occur.
Mid Europa Partners seeks to take controlling stakes in its investments either alone or in partnership with other financial or strategic partners. The firm typically invests equity ranging from 25 million to 200 million euro in companies with enterprise values between 100 million and 1.5 billion euro, which are cash-flow generative and have leading market positions in sectors with high barriers to entry.
The most attractive investments in times of market downturn are leading firms in sectors with strong and stable demand like, for example targets in the telecoms and healthcare sectors, Knorr said.
“Whilst no sector has proven entirely immune to the most recent financial and economic crisis, and subsequent recessionary trend in the region over the last twelve months, our sector selections have shown an adequate downside protection.”
The countries in Central and Southeast Europe are interdependent and rely on the global economic recovery to filter into stronger demand for their exports and to return to a healthier level of foreign investments, Knorr said.
“The corrective growth adjustments currently being experienced across the region are hard to bare, but are necessary to bring these economies to a stable post-crisis growth equilibrium.”
Knorr added that continued fiscal prudence combined with the support of recovering global demand will be key if the current post-crisis stabilisation is to develop into slow, but existent growth in 2010 or 2011.
Although the challenges vary from market to market, some of those Mid Europa Partners have faced include underdeveloped local legal and financial statutory frameworks for foreign investments, especially leveraged investments, Knorr said.
The quality of information provided in the acquisition process and the availability of quality management also are among the problems an investor confronts.
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