2. června 2010

Expansion of the Largest Czech Photo Bank to Be Supported by a New Investor

Genesis Private Equity Fund II Acquires Majority Share in Profimedia

Prague, 3 June 2010

After ten years of autonomous growth, Profimedia, a 100% Czech-owned company and the leading provider of visual content for the media and advertising industry on the Czech and Slovak markets, has attracted a new investor. The Genesis Private Equity Fund II (GPEF II) has acquired a majority share in Profimedia, while its founder and until now sole owner Petr Novák will retain a 40 percent share and continue to manage the company.

“During its ten year history, Profimedia has become the largest Czech photo bank on the market. To continue our dynamic growth in the future, the company must focus more strongly on foreign markets. Capital obtained from the GPEF II fund will help us in this expansion,” said Petr Novák, who founded Profimedia at the age of twenty, while still a student at the University of Economics in Prague.

“Profimedia can be seen as an example of ‘success story’ in which a young Czech entrepreneur built a company from the ground up and helped it reach the top in its field. We’re pleased that, as the new majority shareholder, we will have the opportunity to take part in its successful further development,” said Jan Tauber, the Director of Genesis Capital, which manages the GPEF II fund. In the current environment, characterised by difficult access to standard bank finance for small and medium businesses, the fund, with a volume of 40 million euro, is an effective alternative through which companies with growth potential can obtain needed capital. GPEF II, whose investors include the European Bank for Reconstruction and Development and Česká spořitelna,provides growth capital to small and medium companies in the Czech Republic and Slovakia as well as financing of company buy-outs. The investment in Profimedia is a combination of both these types of financing.

Profimedia manages an extensive databank of more than 40 million professional images, footage, illustrations and promotional photographs from around the world, provided through its client-friendly web application for publication in the media or for advertising and marketing purposes. With an over fifty percent market share in the Czech Republic, where it is the clear market leader, the company’s clients include the majority of publishers of newspapers, books and magazines, as well as leading advertising agencies, web portal operators, television stations and many large companies. The situation is similar in Slovakia, where the company’s market share is estimated at 60 percent. Profimedia is the third largest photo agency in Hungary and also operates in Slovenia, Croatia and Serbia. Overall, Profimedia works with more than 400 publishers and 1,200 advertising agencies. Most of the photographs in its database come from major international suppliers of visual material such as Corbis, AFP, Time Inc. or BBC, and private photographers. However the number of its own photographs is also growing.

To secure its further growth, Profimedia is currently looking for opportunities to acquire companies in the same field of business in Central and Eastern Europe. "Some negotiations have progressed significantly,” said Petr Novák, adding that potential acquisitions would be financed from capital obtained from the sale of the majority share in Profimedia to the GPEF II fund. Another area in which the company sees considerable growth potential is so-called micro-stock – the sale of rights for the publication of photographs in lower resolution, suitable, for example, for the creation of websites. “We estimate that this market segment will grow in double figures in the coming years and Profimedia is ready to be part of that growth,” said Petr Novák.

Deloitte acted as a financial advisor to the owner of Profimedia. “We were delighted to assist the owner of the company in successfully closing this transaction in these economically challenging times. This transaction should help Profimedia in its further development and cross-border expansion," noted Pavel Dědek, Director of Deloitte's Financial Advisory services.

Genesis Capital is an established mid-market private equity firm based in Prague and active in the Czech and Slovak markets since 1999. It is the only private equity firm managing funds of international institutional and private investors that is focused exclusively on the Czech and Slovak small and medium sized companies segment investing. Its team currently numbers seven highly qualified investment professionals with extensive private equity experience as well as diverse range of relevant prior qualifications.

GPEF II is the third fund managed by Genesis Capital. With the closing of GPEF II, the total funds raised and managed by Genesis Capital amount to €90m. Over the past 10 years, the Genesis team completed over 20 investments, of which over 10 were sold, having achieved attractive investment returns in majority of cases. Nine investments still remain in the portfolio. These companies have a total aggregate turnover over €170 million and employ more than 3,000 people. Past and current investments include companies such as AB Facility, pietro filipi, CCS, ETARGET, Gumotex, Energetické strojírny Brno, or Roltechnik.

About GPEF II Investors

European Bank for Reconstruction and Development (EBRD)is an international financial institution that supports projects in 30 countries ranging from central Europe to central Asia. Owned by 61 member/shareholder countries, the European Community and the European Investment Bank, the EBRD invests primarily in private sector clients whose needs cannot be fully met by the market; the EBRD promotes entrepreneurship and fosters transition towards open and democratic market economies.With total assets exceeding €30 billion, EBRD provides project financing for the financial sector and the real economy, and also works with publicly-owned companies to support privatization, restructuring of state-owned firms and improvement of municipal services. Since 1992, the EBRD has committed € 1.1 billion to projects in the Czech Republic, financing 109 projects with a total value of EUR 4.8 billion. In Slovakia, the EBRD has committed € 1.3 billion, financing 107 projects with a total value of EUR 4.1 billion. The EBRD has been the largest and most experienced single investor into private equity and venture capital funds in Central and Eastern Europe with commitments to funds exceeding €2 billion. EBRD’s significant support to its private equity fund managers accelerates the development and institutionalization of the private equity industry in the region.

Česká spořitelna is the largest Czech bank in terms of number of clients. The bank, which specializes in services for retail clients, small and medium-sized companies, towns and municipalities, plays also important role in the financing of large companies and in providing financial market services. In addition, it ranks among leading securities dealers on the Czech capital market. Presently, Česká spořitelna has 5.3 million clients, total assets over CZK 870 billion (€ 33 billion) and 650 branches. Since the year 2000, Česká spořitelna is a member ofErste Group, one of the leading financial providers in CEE region. The companies of Erste Group serve 17.2 million clients in 9 countries (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia, Serbia, Ukraine, Poland), with almost 3,000 branches and 54,000 employees. The total assets of Erste Group exceed €200 billion.

Gimv is an independent Belgium-based investment company with nearly 30 years of experience in private equity and venture capital. The company is listed on NYSE Euronext Brussels and currently manages around EUR 1.7 billion of assets (including third party funds). Focusing mainly on the European market, Gimv finances management buyouts and provides growth capital to companies in a wide range of industries, targeting small and medium-sized enterprises with an attractive track record, fast growth perspectives and a strong market position. Gimv also provides venture capital financing to high tech sectors through its specialist teams in technology, life sciences or cleantech. In order to access specific growth markets and particular asset types, Gimv cooperates with established and specialized local players. Gimv has been active in Central Europe since the mid-1990s. In the Czech Republic and Slovakia, Gimv has managed its own fund Gimv Czech Ventures which was established in 2000 and is currently in its winding-up phase. Participating in GPEF II is a natural continuation of Gimv’s activities in the Czech and Slovak markets and within the CEE region.