Romania is the second largest market in the CEE, with a fast growing economy and a thriving private sector. The country plans to join the European Union in 2007. We think that this means there will be opportunities for private equity investments, so we decided to extend our presence in Romania by opening a Representative Office in Bucharest. – Jacek Siwicki, managing partner of Enterprise Investors, responsible for EI’s investment strategy in Romania and the whole of Central Europe.

Enterprise Investors is the largest private equity firm in Central Europe. Active since 1990, it is the investment manager for five funds, with $1.1 billion under management. The funds managed by Enterprise Investors have invested and committed $816 million in 95 businesses in Poland, Romania, Slovakia and Bulgaria. They have completed 70 exits and returned $739 million to investors at superior rates of return.

Enterprise Investors pioneered buyouts in Poland, completing the first large buyouts without leverage (Agros Nova – $27 million, Kruk Systemy Inkaso – $12 million). It also managed one of the region’s first LBOs (Nomi – $12 million) and the first MBO on the Warsaw Stock Exchange (Stomil Sanok – $30 million). EI is now Poland’s leading buyout specialist.

“Buyouts represent most of our investments now, and we expect the whole Polish buyout market to continue growing. This is due to a number of fortunate developments – the emergence of large deals, the increasing willingness of Polish entrepreneurs to exit or cash out controlling stakes in their companies, and the acceptance of leverage as a legitimate tool by the public markets and the banks. We have built relationships with several banks that understand the nature of these complex transactions, which are standard to developed markets but fairly new to Poland,” said Michał Rusiecki, a partner at Enterprise Investors.

Harper Hygienics began operations in 1990. It manufactures a range of products used in facial and skin care, including cotton pads, wet wipes, ear swabs, and plaster strips. Harper Hygienics produces both branded products under its Cleanic brand and private label products under the brands of major retailers (Géant, Real, Makro); the branded products account for 60% of domestic sales. Harper Hygienics has built a leading position in the Polish as well as Russian markets for personal hygiene products. It operates a modern manufacturing facility near Warsaw. In 2003 the company achieved revenues of PLN 84 million ($22 million).

Commenting on the transaction, Mouloud Kermiche, founder and president of Harper Hygienics said: “We are delighted to have attracted this remarkable private equity partner to work with on developing our company. The most valuable assets of Harper Hygienics are its excellent products and the well-recognized brand. We strongly believe in the growth potential of the company that we have created. Having gained the Polish and other markets, the common goal of the founders and the new investor in Harper Hygienics will be to make the Cleanic brand recognized in the whole of Central and Eastern Europe.”

Enterprise Investors is the largest private equity firm in Central and Eastern Europe. Active since 1990, it is the investment manager for five funds, with $1.1 billion under management. The funds managed by Enterprise Investors have invested in 93 businesses in Poland and other countries of Central and Eastern Europe, committing $740 million to these transactions. They have completed 60 exits and returned more than $680 million to investors at superior rates of return.

The transaction is a result of the search for a strategic investor that Bauma initiated in 2003. The price to be paid by Ulma for the shares in the public tender will be the zloty equivalent of €2.04 per share.

The transaction is conditional upon receiving the administrative approvals of the Polish Securities and Exchange Commission and the Anti-Monopoly Office. The tender should be announced by Ulma no later than July 6, 2004.

Bauma SA is the second largest producer and provider of formwork in Poland. The company was set up in 1989 and was floated on the Warsaw Stock Exchange in 1997. The funds managed by Enterprise Investors invested in Bauma in two equity increases in 1997 and 1999, and have played an active role in developing the company. In 2002-03 Bauma went through a successful restructuring which, coupled with the upturn in the construction industry in Poland, should result in improved financial performance this year. The company has also been actively developing export sales in the countries of Central and Eastern Europe.

A strategic investor like Ulma should help further grow Bauma’s position on the Polish and international markets, said Krzysztof Goetz, a member of Bauma’s Supervisory Board.

We are very satisfied with the cooperation with both the management team led by Mr. A. Kozłowski and with the private shareholders who founded the company. We are also convinced that together with the strategic investor Bauma is well prepared to capitalize on the upturn in the construction industry, said Dariusz Prończuk, a partner at Enterprise Investors.

Ulma Construcción is one on the global leaders in the formwork and scaffolding industries. Founded in 1961 and based in Onati (northern Spain), Ulma manufactures and markets industrialized systems for the construction industry, and offers its customers technical design, the hiring of materials, and assembly services. The company’s production plant is fully automated, and is one of the largest such facilities in Europe. Ulma, which has been a registered company (ISO 9001) since 1994, has its own strategically located technical and commercial network. This comprises 20 offices in Spain, plus affiliated offices in France, Portugal, the Netherlands, Chile, Argentina, Peru, Brazil, USA and Germany, as well as important distribution partners in Europe and Latin America. In the short term, with its concept of integrated services based on offering solutions and systems, Ulma has established itself as a competitive European company with a sound future and a clear international calling. Ulma has been advised in this transaction by Nmas1, Spain’s leading corporate finance firm.

Enterprise Investors is the investment adviser to a group of five private equity funds active in Poland since 1990. The funds managed by EI have invested $690 million in 92 investment projects, which makes them the largest private equity investor in Central and Eastern Europe. EI funds have exited 59 investments and returned $663 million to their investors.

The Polish Enterprise Fund and Polish Private Equity Funds I & II, established with the capital provided by major European and US financial institutions, own 56.5% of Bauma.

Polish Enterprise Fund V will be the largest private equity fund managed by Enterprise Investors and the largest fund raised thus far in Central and Eastern Europe. The robust first closing included leading pension funds, insurance companies and financial institutions from the USA and Western Europe.

“Polish Enterprise Fund V includes new investors to the region as well as investors with experience from our previous funds. Their decision to join us in PEF V confirms EI’s track record and Poland’s attractiveness for investors. Poland’s imminent access to the EU makes PEF V particularly promising. The first investments of Polish Enterprise Fund V will be made in the next few days,” said Jacek Siwicki, managing partner of Enterprise Investors.

Polish Enterprise Fund V will continue the group’s strategy of investing in companies with solid management, a strong market position and high growth potential. PEF V will make investments ranging from €3 million up to €45 million. The most attractive targeted sectors include financial services, consumer products, telecoms, retail, healthcare, manufacturing, and environment. The typical holding period of an investment is three to seven years. Transactions considered for PEF V will primarily be expansion and buyout capital. PEF V will be managed by the region’s largest and most experienced investment team, which has 14 years of experience and numbers 20 professionals.

Polish Enterprise Fund V will focus on Poland, although up to 30% of the fund’s capital may be invested in other countries of Central and Eastern Europe, including Romania, Slovakia, the Czech Republic, Hungary, Bulgaria, and the Baltic States.

Enterprise Investors has been active since 1990. Together with the capital of Polish Enterprise Fund V, funds under the company’s management will exceed $1 billion. As of January 2004, EI’s private equity funds invested $684 million in more than 92 companies across Poland, Romania, and Slovakia. The funds have fully exited 58 investments and returned $659 million to their investors.

The Polish–American Enterprise Fund was founded in 1990 on the initiative of the US Congress, following President George Bush’s visit to Poland the previous year. PAEF’s objective was to support the development of the market economy in Poland through loan programs, capital projects, and training assistance. The United States transferred $262m to the Enterprise Fund at that time.

Throughout the 1990s, the Polish–American Enterprise Fund was one of the major investors in Poland, contributing to the success of many thousands of private Polish companies. Moreover, it was the only one of 14 enterprise funds established in Central and Eastern Europe on the initiative of the US Congress to both maintain the capital entrusted to it and even increase those assets (to over $350m). In 1999, in recognition of its contribution to the development of the Polish economy, PAEF was presented with the Special Economy Award by the president of the Republic of Poland.

PAEF’s assets are managed by Enterprise Investors (EI), the leading private equity firm in Poland and the region. EI has invested $700m in Poland to date, and has supported the development of approximately 100 companies from various sectors through its direct investments. PAEF’s success led to the establishment of other investment funds managed by EI: Polish Private Equity Funds I & II (1992, with total equity of $151m); the Polish Enterprise Fund (1997, $164m); and Polish Enterprise Fund IV (2000, $217m).

In view of PAEF’s success in achieving its objectives, the US government decided to close the fund. Half of PAEF’s initial capital was returned to the US Treasury in 2000-01, while the remaining funds were set aside for the endowment of the Polish–American Freedom Foundation.

The new foundation was established in Poland in 1999 and started operating in 2000. Its mission is to reinforce civil society, democracy and the market economy in Poland, and in particular, to equalize opportunities for individual and social development, and to share Polish transformation experiences with other countries of Central and Eastern Europe.

PAFF’s programs are financed with revenue generated by its endowment. In less than four years the foundation has received $209m from PAEF and has disbursed over $14m toward its programs.

Nomi SA is the largest and oldest DIY retailer in Poland, with 39 locations across the country. Nomi’s sales for 2003 are projected to exceed half a billion zlotys ($125 million).

Kingfisher plc is the largest DIY chain outside the USA, with more than 600 stores across Europe and Asia, and with an annual turnover of more than $16 billion. Kingfisher’s decision to divest Nomi follows a strategic review of the company’s international operations after its acquisition of a competing chain, Castorama, late last year.

Nomi’s president, Mariusz Gliwiński, said: “Attracting Enterprise Investors as the new investor for Nomi marks a milestone in the company’s development. This experienced financial partner has presented the best strategic offer for Nomi. With its portfolio of prosperous enterprises, including several retail chains, EI is a good successor to Kingfisher.”

Stanisław Knaflewski, a partner at Enterprise Investors, said: “Our strategic goals for the company are to build on Nomi’s unique focus on bringing quality products to consumers in Poland’s smaller cities, while improving the chain’s efficiency. Our extensive experience in the retail sector makes us similar to an industry buyer in this case.”

Enterprise Investors is the oldest and largest independent private equity manager in the region. The firm manages funds from major private European and US investors representing a total of $722 million. Private equity funds managed by EI have invested over $650 million in 91 companies across all economic sectors in Poland and Central and Eastern Europe. EI developed several successful retail chains in Poland, including Eldorado (food retailer) and Apteki Polskie (chain of pharmacies), financed the expansion of W.Kruk and Deni Cler (jewelry and fashion), and is an investor in LPP (fashion retailer).

Enterprise Investors had an option to purchase the warrants based on its agreement with Telia-Sonera dated 28 May 28 2003 and decided to exercise the option. As a result of the transaction, PEF IV owns 9,012,520 Netia shares and 18,520,889 two- and three-year warrants. In accordance with the Polish securities law, PEF IV informed Netia and the Warsaw Stock Exchange that its total ownership position had increased to 6.7%.

Robert Manz, EI partner responsible for telecommunications investments, commented:

“We believe Netia’s warrants are an attractive security, as they give us the right to purchase Netia’s shares in the future at a fixed price of PLN 2.53. We decided to exercise our option to purchase additional warrants since the terms of our agreement were attractive. We are also encouraged by the six-month financial results released by Netia and the positive announcements regarding Netia’s license fees.”

Netia SA is the largest independent fixed-line telecommunications operator on the Polish market. Netia Holdings is a public company traded on the Warsaw Stock Exchange.

Enterprise Investors has been active since 1990. It manages funds provided by major private European and US investors representing a total of $725 million. Private equity funds managed by EI have invested over $650 million in 90 companies across all economic sectors in Poland as well as Central and Eastern Europe. A total of $65 million has been invested in the telecom sector.

Kruk Systemy Inkaso, based in Wrocław, Poland, was founded in 1998. It provides debt management and collection services for corporate clients, including banks, utilities, pay TV operators, and telecoms. Kruk’s clients include the some of the highest profile international businesses operating on the Polish market, such as ING, Raiffeisen, Canal+, UPC, Avon Cosmetics and Era Mobile.

Kruk has experienced a fivefold increase in the volume of client accounts serviced, from PLN 180 million ($45 million) in 2001 to PLN 903 million ($225.7 million) in 2002. Kruk’s net profit in 2002 was PLN 7.3 million ($1.8 million).

The retail receivables market that Kruk now leads is expected to continue its rapid expansion, due to the growth of consumer loans and accounts coupled to the increasing recognition among banks and other businesses of the need to outsource debt collection services.

“The outsourcing trend observed in other European markets and now initiated in the Polish banking sector leads us to believe that the market will keep stimulating Kruk’s growth in coming years,” said Dariusz Prończuk, a partner at Enterprise Investors.

“Kruk’s strategy is to strengthen its position as a strong market leader in Poland. We believe that Enterprise Investors will contribute significantly to Kruk’s further development, given the investor’s experience in the financial sector and expertise in building business value,” commented Piotr Krupa, president and founder of Kruk.

Enterprise Investors has been active since 1990. Funds managed by Enterprise Investors have invested over $650 million in almost 90 companies across a broad range of business sectors in Poland as well as Central and Eastern Europe.

EI has been a successful investor in banks and financial institutions, including Opel Bank, Rabobank, and the First Polish-American Bank, now owned by Fortis. Lukas, which EI sold to Crédit Agricole in 2001, was one of the most successful investments in the financial sector in the region. This investment in Kruk underlines EI’s support for innovation in the sector, and the firm’s leadership in its search for superior returns.

LPP SA has been traded on the Warsaw Stock Exchange since May 2001, and is a high-growth company that is attractive to investors. Rapid, systematic expansion allowed LPP to achieve total revenues of PLN 261.6 million (over $65 million) and net profit of almost PLN 19 million ($4.75 million) in 2002. The 1Q 2003 sales results exceeded PLN 75 million ($4.25 million), 49% up on the same period in 2002. The company raised PLN 50 million ($13.3 million) of new equity to continue its successful expansion by doubling the number of stores within two years.

Analysts estimate that the Polish clothing market generates sales of approximately $3.5-4 billion annually. The market is fragmented, with very few chains numbering more than five to ten stores. Reserved is by far the largest fashion retail chain in Poland.

“We are very pleased to become an investor in such a dynamically growing company, which has clear potential to become a regional leader in its market. With our extensive retail experience, we should be able to help management develop the company further,” commented Jacek Siwicki, managing partner of Enterprise Investors.

Enterprise Investors has been active since 1990. Funds managed by Enterprise Investors have invested over $650 million in almost 90 companies across all economic sectors in Poland and Central and Eastern Europe.

EI is an active private equity investor in the Polish retail sector. The firm’s funds have backed a number of successful retail companies, including W.Kruk and Eldorado, both now traded on the WSE, as well as Deni Cler, now part of the W.Kruk holding.

The Polish market for classified and overdue hospital debt and payables is estimated today at PLN 6-8 billion ($1.5-2 billion) and will continue to grow dynamically in the context of medical reforms. The healthcare market is an attractive niche for specialist financial institutions in developed markets, and this gives a strong indication of what can be expected in Poland.

Magellan Sp. z o.o. has been operating since 1999. It buys the outstanding debts of public healthcare units from primary creditors (medical equipment suppliers, pharmaceutical companies, etc.) at a discount and then restructures and collects the debt for a profit. Magellan uses proven, statutory procedures of risk assessment and cash collection and has built a reputation as the most effective and reliable company of its type in Poland. It works with over 500 hospitals and 200 public healthcare suppliers, including foreign multinationals, to cover virtually all the market. Magellan is a driver for the continuing market transformation of hospital healthcare providers in Poland.

“New equity will enable Magellan to develop its debt portfolio and offer new products to keep up with the growing and increasingly sophisticated market. After three years of rapid growth the company also needed an experienced business partner,” said Marek Błaszkowski, Magellan’s president.

“The company has a transparent financial situation and is run by an experienced and dynamic young team with unique know-how of the healthcare and financial markets. We seek businesses like this for our portfolio and we are pleased that management chose EI as their preferred partner,” said Dariusz Prończuk, a partner at Enterprise Investors.

Enterprise Investors is the largest private equity firm in Poland and the region. Funds managed by Enterprise Investors have invested over $650 million in 87 companies across all economic sectors. EI is an active private equity investor in the Polish healthcare and financial markets.