Genesis Capital Announces First Closing of a New Private Equity Fund Focused on the Czech Republic and Slovakia - the Genesis Private Equity Fund II
Prague, 30 June 2009
Genesis Capital, a private equity firm focusing on mid-market investments in the Czech Republic and Slovakia, has completed the first closing of Genesis Private Equity Fund II (GPEF II) at the size of €40 million. The target size of the fund is €60 million. GPEF II will provide equity financing, predominantly in the form of buyout funding and growth capital, to small and medium sized companies based in the Czech Republic and Slovakia.
GPEF II will invest in established companies with strong growth potential either on their domestic markets or through development of export activities.
The investments will typically range from €2 million to €6 million of equity capital per project. GPEF II may also invest in larger projects (typically up to €40 million per investment) in cooperation with one of its several co-investment partners. The usual investment holding period will be three to six years.
As a generalist fund, GPEF II will invest into companies from a wide range of industries, such as manufacturing, energy services, industrial and business services, retail, industrial goods, consumer goods, IT, telecoms and media.
The investors joining in the first closing of GPEF II are established financial institutions with a strong reputation and long-term commitment to the Czech and Slovak markets. They include the European Bank for Reconstruction and Development (EBRD), Česká spořitelna, Gimv (a Belgium based private equity firm), and a major European bank. The fund has a target size of €60 million and aims at final closing by mid-2010.
“We are pleased that with its new fund GPEF II, Genesis Capital will continue to provide equity capital to Czech and Slovak small and medium sized companies. We feel that there is a strong demand for equity capital in this market segment, particularly in the current environment characterized by difficult access of small and medium sized enterprises to standard bank financing. We also see many interesting opportunities for investment in buy-out situations. Genesis Capital is the only firm managing funds of international institutional and private investors that is exclusively focused on providing financing to the Czech and Slovak small and medium sized companies,”said Jan Tauber, Managing Director of Genesis Capital.
GPEF II will support companies possessing experienced management teams, whether existing ones from within the company or brought in from the outside. The management must have clear vision and well formulated and realistic future development concept for the company.
“Good management is vital for success. In all investments, we strongly prefer to involve the company’s management team as a co-investor alongside the fund and thus enable the top managers to participate on the future value creation,”said Jan Tauber.
In expansion capital investing, the money used in the investment goes to the company, in which the fund acquires a stake alongside the original owners, who often continue to manage and grow the company. The money is then used to support further growth.
“The equity financing provided to our company by Genesis Capital helped pietro filipi to expand its own retail store network in the Czech Republic, to increase exports and to introduce more cost-effective system of store management. Since the Genesis investment, the company’s revenues more than doubled while its profitability improved significantly,”said Petr Hendrych, the founder and managing director of pietro filipi, a firm designing, manufacturing and retailing branded clothing, to which Genesis Capital provided growth financing in 2004.
In buy-out situations, the equity capital provided by GPEF II is used as pay-out to leaving owners. In all cases, the Genesis team supervises the company via positions in boards of directors and/or supervisory boards and provides high level financial management and business development support tailored to the needs of each particular company.
In the buy-out area, GPEF II plans to explore opportunities in succession motivated transactions. These are buy-out situations in which either a single owner or a group of shareholders decide to leave the company after having built a successful and valuable business.
Jan Tauber noted:“We have seen an increasing number of succession motivated investment opportunities over the past several years. GPEF II is uniquely positioned to provide exit solutions to the leaving owners while ensuring continuity of the business and its further growth.”
About Genesis Capital
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 fully 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 privatisation, 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 institutionalisation 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 idustries, 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.