Companies that want to keep up with dynamic developments on the market usually require external support: this can help them make the most of a strong market and enjoy the benefits of sector leadership. In many cases companies have insufficient resources and equity to finance exponential growth of organizational structures, technology, and human resources. Private equity funds specialize in taking advantage of the opportunities offered by the market.
In the case of buyout transactions, we acquire part of the business – usually a majority stake. The founders often stay on as our partners in the company. Many entrepreneurs count on us to help them make a seamless transition to the next stage of their company’s development, in particular by contributing to the strategy, helping expand the business, e.g. through mergers and market acquisitions, and implementing sound financial practices. They also value our corporate governance and capital markets expertise.
When we invest in dynamic companies operating in fast-growth markets we are prepared to wait for the effects of our work longer than most other financial investors. For example, unlike our competitors, we often postpone paying out dividends.
We have completed buyout transactions in Kruk, Kofola, Zelmer and AVG Technologies.
KRUK
Kruk, the largest company now operating in the retail receivables market in Poland and Romania, was established in Wrocław by two young lawyers in 1998. The founders accurately identified demand for the outsourcing of retail debt collection in Poland's telecommunications, power, and retail banking sectors. The company developed very dynamically from the outset, but the entrepreneurs had insufficient capital and resources to keep up with the growth in the market. EI became interested in the company, and in 2003 our fund acquired a controlling stake. The founders kept the remainder, and one of them is still the company's CEO.
A year later our fund made a follow-on investment in Kruk. This capital was spent on developing technology and organizational structures to keep up with the increasing customer numbers and the high volume of receivables being handled.
As shareholders, together with the senior managers we drew up a strategy for Kruk’s further development. We jointly strengthened the management team and introduced new risk management and portfolio valuation procedures. Kruk developed its debt purchasing business and set up one of the first securitization funds on the market. In parallel, the company has also been expanding its presence on the receivables market in Romania, where it now leads.
In 2011, Kruk successfully debuted on the Warsaw exchange. Our fund sold a considerable part of its stake in the public offering, yielding a stellar return on the investment.
"Attracting EI as an investor was one of the milestones in the history of our company. Jointly we have been able to significantly strengthen Kruk's leadership position on the market."
Piotr Krupa, President and founder of Kruk