MCI Management SA, the first Polish private equity fund listed on the Warsaw Stock Exchange, plans larger portfolio investments and acquisitions of competitors as it seeks to grow into a central European leader.
The fund, which bought stakes in 10 companies this year, may look for an acquisition worth 500 million zloty to 1 billion zloty ($260 million), its founder and Chief Executive Officer Tomasz Czechowicz said in an interview.
Warsaw-based MCI, established in 1999 to invest in technology and e-commerce companies with funds from wealthy Poles, plans to exit some of its current investments and expand in both eastern and western Europe. MCI’s assets may rise by about 46 percent to an equivalent of $530 million at the end of 2015, while takeovers of peers could help it achieve annual growth of as much as 40 percent in the coming years, according to the chief executive.
“We’ve reached the stage where we may consolidate the private equity industry and grow faster than organically,” Czechowicz said. “In the long run, we may be the region’s leader. Three to four billion zloty should be enough to achieve it.”
Czechowicz considers competitor Abris Capital Partners to be “complementary” for MCI. While his fund isn’t in talks with Abris, whose assets include waste-treatment and express-delivery businesses, “in one or two years, we would like to show something in this area,” the CEO said.
MCI may get as much as 1 billion zloty from exiting some of its portfolio investments this year. It has already sold stakes in Wirtualna Polska SA, Poland’s biggest Internet portal, and in telecommunications operator Netia SA. The fund may quit three more companies in 2015, said Czechowicz. The divestments account for 60 percent to 70 percent of funds it plans to raise, with the rest coming mainly from Polish investors.
The home country, which now represents about half of MCI’s portfolio, will become less important in the future. MCI wants to have assets split equally between both central and eastern Europe and western Europe, which now accounts for 25 percent of the portfolio.
“We want to build regional champions for a market of 100 million people,” Czechowicz said.
MCI also owns companies in Turkey, Germany, the Czech Republic and the U.K., and Czechowicz called Russia a “superb” market for investments.
“I’m saying something very unpopular now,” he said. “But the capital has escaped Russia, and what is left is value with good pricing. And there are 140 millions consumers who need better service.”
Still, MCI limits Russian investments to no more than 10 percent of assets “due to political risk,” he said.
The fund, which has holdings in Polish e-commerce business Morele.net, sees a need for consolidation among Internet retailers.
“No one has taken up such a project yet, and we are well-positioned to do that,” Czechowicz said.