April 7, 2014

Genesis Private Equity Fund Achieved above Average Returns to its Investors

Genesis Capital, a private equity firm focusing on mid-market investments in the Czech Republic and Slovakia, has announced the successful completion of its investment activities in the Genesis Private Equity Fund (GPEF). The fund was raised in 2003 and made 11 investments. During the period of 2003 to 2013, GPEF more than doubled the value of the portfolio, generating IRR exceeding 20%.

GPEF was set up in 2003 with the size of €30 million. The investors were established financial institutions with a strong reputation and long-term commitment to the Czech and Slovak markets. They included the European Investment Fund (EIF), European Bank for Reconstruction and Development (EBRD), Česká spořitelna, and an asset management firm of the Lakshmi Mittal family.

The fund invested predominantly in the form of buyout funding and growth capital, to small and medium sized companies based in the Czech Republic and Slovakia. During the first five years, GPEF invested into 11 companies. Some of them were later supported by additional acquisitions using GPEF funding.

As a generalist fund, GPEF invested into companies from a wide range of industries, such as manufacturing, energy services, industrial and business services, fashion retail, industrial goods, consumer goods, IT, telecoms and media. The companies in GPEF portfolio had a total aggregate turnover over €170 million and employed more than 3,000 people. The investments included companies such as AB Facility, pietro filipi, CCS, ETARGET, Gumotex, Energetické strojírny Brno, CTS-servis or Roltechnik.

“Our business has two main objectives. With respect to the invested companies, we support their development and growth. In relation to our investors, we aim at generating good financial returns.The GPEF fund fulfilled both objectives quite well,”said Jan Tauber, Managing Director of Genesis Capital.

This is confirmed by the achieved results. GPEF portfolio more than doubled its value and achieved returns measured by IRR in excess of 20%. “According to our data, such returns position GPEF well above industry average,” added Jan Tauber.

One of the examples of successful growth support strategy is GPEF’s investment into the company AB Facility. Originally purchased in late 2003 as a Czech facility management division spun off the multinational company ABB, re-named AB Facility, the company later acquired three more related businesses, using additional equity provided by GPEF, and grew in size from original CZK 150 milion (€6 million) revenues to more than CZK 1.2 billion (€50 million) in 2010. GPEF then exited the investment to a larger regional financial investor group.

Mr. Miroslav Tvrdý, the former CEO of AB Facility said: “The Genesis investments and support enabled a small local division of a multinational group to become the number one player in facility management in the Czech market and to start its presence in Slovakia.”

Another example is GPEF’s investment into a majority position in a Bratislava based internet advertising company ETARGET in 2006, alongside its two founders-managers. “This transaction helped us to consolidate the company’s ownership structure and secured additional financial resources for planned growth,” said Peter Vidovič, one of two top managers and founders of ETARGET. After large growth during 2006 and 2007, GPEF and the two founders sold the company to a regional internet group.

“These two examples confirm our long term investment philosophy that 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.

Besides the already finished GPEF fund, Genesis Capital currently advises the €40 million GPEF II fund, which was raised in 2009 and is almost fully invested into 10 companies. “With the good returns of the GPEF and successful development of GPEF II, Genesis Capital is now preparing its third fund, GPEF III. We started discussions with existing institutional investors and we also plan to invite some new investors during 2014,” said Jan Tauber. The planned GPEF III will have the same focus as the previous funds, growth and buyout investments into leading Czech and Slovak mid-market businesses.

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. Over the 15 year period, Genesis Capital advised three funds with total capital close to €100m and made over 25 investments.

GPEF, raised in 2003 made 11 investments. These companies had a total aggregate turnover over €170 million and employed more than 3,000 people. The investments included companies such as AB Facility, pietro filipi, CCS, ETARGET, Gumotex, Energetické strojírny Brno, CTS-servis or Roltechnik.