Genesis Private Equity Fund III (GPEF III), a private equity fund advised by Genesis Capital, has completed the acquisition of 96 % of the Danish owned and Prague based company CN Group, an IT company providing nearshore software programming, QA management, testing and computer-aided modelling (CAD). It is the seventh investment for GPEF III, which has approximately 82 million EUR available for investments to small and medium-sized enterprises in the Czech Republic, Slovakia and neighbouring countries of Central Europe.
The entry of GPEF III into CN Group can be regarded as one of the possible solutions of the succession challenges, recently becoming a major topic for number of Czech SME companies. The current owners consisting of financial investors and retiring CEO of the company decided to sell their shares. As the company is currently led by a professional management independent from its owners, the management buy-out was a logical outcome in which GPEF III together with the management team acquired 100% share in the company.
“The IT business and software development are very attractive and growing business sectors, which attract investors not only on the public markets but also in the private equity world. CN Group with its 25-year history, long term business relationships and business focus on the German speaking countries and the Nordics is an
attractive platform for further business development and consolidation of the market of nearshore software programming,” says Jan Tauber, Managing Partner of Genesis Capital, the local advisor to Genesis Private Equity Funds.
The funding and support from GPEF III could help the company grow not only organically but also through add-on acquisitions. “There are numerous small and medium-sized companies in the region in areas that could suitably complement our activities, both in nearshore software programming as well as other complementary areas,” says Michal Širica, CEO of CN Group, and adds: “We believe that Genesis will be the right equity partner in our quest for realizing the future growth strategy.” Going forward, CN Group will focus on further expansion of the services offered for example in mechanical design engineering. Select add-on acquisitions complementary to the company’s current business model could also be part of the future strategic development.
As standard in all of Genesis investments, a special emphasis was given to a thorough assessment of the company´s management as the cornerstone for the
future success of the company. Continuing managers appear to be the right fit to fully take over the managerial duties and stand responsible for further strategic development. Retiring CEO and one of the sellers Steen Westh Nielsen will stay with the company for a transitionary period as the member of the supervisory board. “I view the gradual managerial replacement as highly beneficial for the company. New ideas and innovative approaches in combination with the long-term experience and expertise will push CN Group to the next level,” says Mr. Nielsen. He admits that he no longer has the ambition to get involved in the executive role, but still savours the passion to pass on his experience.
About CN Group
Founded by Danish owners in 1994, over the last 25 years CN Group has developed high quality outsourced software for its customers in Scandinavia, Germany, Austria, Switzerland and the UK. Additionally, the company offers extensive QA management, testing and training services.
CN Group’s customers are leading businesses in the EU, active in a variety of business sectors such as Finance, Aviation, Media & Publishing, Security and Telecoms. CN Group provides them with flexible business arrangements.
CN Group employs over 280 professionals servicing customers in the production centres in Prague (CZ), Bratislava (SK), Zlín (CZ) and Bucharest (RO). Reported revenues in 2018 were nearly EUR 13m.
Genesis Capital provides advisory services to private equity funds offering access to financing for growth and development of small and medium-sized companies in the Czech Republic, Slovakia, Poland, Hungary and Austria. Since its foundation in 1999, Genesis Capital has provided consultancy to four private equity funds
with a cumulative size exceeding EUR 170 million. These funds supported over 50 firms, having invested over CZK 3 billion. Many of those firms became leaders in their respective fields also thanks to their cooperation with Genesis Capital. The current fund, Genesis Private Equity Fund III (GPEF III), with the size of over EUR 80 million has been actively investing since 2015.
Investors in GPEF III are mostly local and international institutions and investment firms such as the European Investment Fund (EIF), Česká spořitelna (member of
Erste Group), Amundi Czech Republic (member of international group Amundi), Kooperativa pojišťovna and Česká podnikatelská pojišťovna (both members of Vienna Insurance Group), a Finnish fund-of-funds firm eQ Private Equity, a pension fund of a renowned global company, and a Czech family office.
Investors in GPEF III are mostly local and international institutions and investment firms such as the European Investment Fund (EIF), Česká spořitelna (member of Erste Group), Amundi Czech Republic (member of international group Amundi), Kooperativa pojišťovna and Česká podnikatelská pojišťovna (both members of Vienna Insurance Group), a Finnish fund-of-funds firm eQ Private Equity, a pension fund of a renowned global company, and a Czech family office.
Currently, the Genesis funds hold shares in the following companies: GTH multicatering, ST Security, KS Klima-Service, Quinta-Analytica, HP Tronic/Datart, D2G, Sanborn, Stangl Technik Holding and CN Group.
PR representation of Genesis Capital:
Kamil Chalupa, CHM Communications
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