Author: Josef

On March 6, 2009, ARX completed the acquisition of controlling stake in Kakadu Sp. z o.o. The investment is shared between the two funds managed by ARX: DBG Eastern Europe II LP and ARX CEE III LP.

Kakadu (www.kakadu.pl) is a leading pet products retail chain in Poland. The company operates 25 stores located in large cities.

ARX and the Kakadu management intend to strengthen the company’s market leadership by implementing operating improvements, the roll out of new stores and add-on acquisitions.

Kakadu is on track to exceed EUR 20 million in 2009 sales.

Lanex / Singing Rock Acquisition:

On September 26, 2008, Arx completed the acquisition of Lanex a.s. and Singing Rock s.r.o.

Lanex (www.lanex.cz) is a leading Central European producer of technical textile ropes and flexible packaging. The company’s strategy is increasingly focused on technologically advanced segments of the rope industry.

Singing Rock (www.singingrock.com) is a world-renowned player in the personal fall protection and climbing equipment market.

ARX and the Lanex and Singing Rock management teams intend to capitalize on the complementary strengths of each business with the aim of building a leading global player in the rope and climbing equipment market. The combined Lanex / Singing Rock business is on track to generate € 42 M in 2008 sales. Both Lanex and Singing Rock are headquartered in the Czech Republic.

ČSOB and UniCredit banks provided acquisition financing for the transaction.

Donit Tesnit Exit:

ARX is also pleased to announce the successful exit from Donit Tesnit doo, which was completed on September 1, 2008. ARX has exited its investment in Donit Tesnit doo via a sale of 100% of the company to an affiliate of Mohar Satler Investments. ARX generated a return of 3.0 times cash invested and an IRR of 58% on its 2006 investment in the company.

Arx Equity Partners (“ARX”) held the first close of its third dedicated Central and Eastern Europe focused lower mid-market fund at € 83 million. ARX is targeting € 125 million for the fund’s final close. ARX III’s largest first close commitments came from the European Bank for Reconstruction and Development, the European Investment Fund and Alpha CEE II (a fund managed by Alpha Associates).

ARX III is the successor fund to DBG Eastern Europe II LP. DBG Eastern Europe rebranded as ARX and became fully independent in early 2008.

The ARX team of eight professionals is led by co-Managing Partners Jacek Korpala and Brian Wardrop. „ARX III represents a continuation of the strategy we have pursued over the past several years with DBG II; and our geographic focus and investment style are well-suited for the current market environment”, said Korpala. Wardrop added, „succession-driven dealflow in the CEE region is increasing for several fundamental reasons, and ARX is ideally positioned to capitalize on these opportunities”.

ARX III will target equity investments of € 3-15 million per transaction.
Recent ARX events reinforce the attractiveness of the CEE lower mid-market segment. On September 1, 2008, ARX completed an exit from its investment in Donit Tesnit in Slovenia, realizing a cash-on-cash return of 3 times and an IRR of 58%. Then, on September 26, 2008, ARX completed the concurrent acquisitions of two complementary businesses in the Czech Republic (Lanex a.s. and Singing Rock s.r.o.), in a succession-driven buyout. ARX secured acquisition financing for the transaction from ČSOB and UniCredit banks.

Funds managed by Arx Equity Partners (“ARX”) supported Tomplast d.o.o., a Slovenian plastic components producer, to perform an add-on acquisition of Unitplast d.o.o..

On April 25, 2008, Tomplast, backed by ARX, completed the add-on acquisition of a 100% ownership interest in Unitplast. ARX has held a controlling stake in Tomplast since July 2007, when the company was acquired in partnership with Mr. Mark Stemberger in a management buy-in transaction.

Tomplast is a Slovenian manufacturing company, which acts primarily as a tier two supplier of plastic components for the automotive and leisure industries.

Unitplast is a producer of rubber and plastic components located in Semič, Slovenia. On a pro-forma basis the acquisition of Unitplast will more than double Tomplast’s 2008 revenues.

Axon Leasing and Financial Zrt. (“Axon” or the “Company”), the largest non-bank-owned leasing company in Hungary announced today that it has received equity funding from ARX (formerly branded as DBG Eastern Europe), a mid-market focused CEE private equity firm and 3i, the London FTS100 private equity fund, who acted through 3TS Capital Partners in the transaction. The investment was made through a Cyprus-domiciled investment vehicle. The investment, containing both a stock purchase as well as a substantial contribution to Axon’s share capital, totals € 9 M. In addition to this amount, the private equity investors earmarked € 6 million for further expansion in the future.

Axon maintains a solid market position in certain well-defined segments of the leasing market such as the financing of commercial vehicles, machinery and boats. Axon was founded in 1991, and currently ranks among the Top 10 Hungarian leasing companies in truck leasing; is also strong in equipment leasing; and is the market leader in a niche segment: boat leasing. Axon is active in both financial and operational leasing. Axon expects to finance new leasing assets of around € 40 M in 2007 and has a leasing portfolio of € 75 M.

Axon’s core customer focus is the SME market segment, which tends to be under-funded, due to the fact that many SMEs have limited collateral to secure bank loans. Therefore, leasing should assist in driving the growth of the SME segment in Hungary. The current ARX / 3i equity infusion will propel Axon through its next phase of growth and expansion. The new funding will enable Axon to expand into new geographic and product areas. Axon will strengthen its market presence in Western Hungary and is planning to expand into Romania and possibly Serbia or Croatia. Axon sees great potential in its recently launched new division focusing on real estate leasing.

„As an independent leasing company you need to provide superior, value-added service to clients in order to be able to compete with the bank owned leasing firms. Our people are Axon’s greatest assets and we are constantly looking for new talent and experienced professionals. We are very happy to have found such partners as ATX/3i/3TS who are not only committed to support us with funding but also help the development with other important business aspects” – stated Zoltan Kun, Founder & CEO of Axon.

Slovenian plastic components producer, Tomplast d.o.o., has been acquired by DBG Eastern Europe II, LP (“DBG”). Tomplast is one of Slovenia’s leading manufacturers of plastic-moulded components.

On July 6, 2007, DBG completed an MBI of a 100% shareholding in Tomplast d.o.o. The acquisition of Tomplast is DBG’s second Slovenian manufacturing buy-out investment in the past two years.

Tomplast is a Slovenian manufacturing company, with a primary strategic focus as a supplier of plastic components mainly to the automotive industry. The MBI team that has partnered with DBG in the Tomplast acquisition is led by Mark Stemberger. DBG and Mr. Stemberger intend to grow Tomplast in the coming years organically and potentially via acquisitions. The transaction size was not disclosed.

Merger of companies controlled by DBG Eastern Europe II LP: Ergis S.A. and Eurofilms S.A. (the latter quoted on the Warsaw Stock Exchange) is a fact. The Court registered the merger on 29 June. In effect it was created one of the largest plastic processing companies in Central Eastern Europe, with the total annual net revenue surpassing PLN 390 M.

On 29 June 2007, the Warsaw District Court registered the merger of Eurofilms S.A., the leading manufacturer of stretch films in Poland, producer of thermo-shrinking PVC films and distributor of BOPP films and PET tapes, with the Company’s majority shareholder – Ergis S.A. – the largest in Poland and the leading in Central Eastern Europe manufacturer of PVC based products (films, compounds, wallpapers, wall panels and windowsills). The merger was approved by shareholders of Eurofilms and of Ergis at their respective general meetings in May. The new entity is operating under the name Ergis-Eurofilms S.A. The leading shareholder of the merged entity is Finergis Investments Ltd, which in turn is controlled by DBG Eastern Europe II LP.

Strategic development objective of the merged companies is to strengthen its leading position in manufacturing of films and processing plastic in Central Eastern Europe.

Jacek Korpala, Partner at DBG, said: „We are glad that it was possible to effect the merger efficiently, fast and with support of the companies’ shareholders. We are looking forward for further fast development of the merged companies, both organically and through acquisitions. We believe that Ergis-Eurofilms S.A. will be a fruitful investment for all of its shareholders.”

Komex Sp. z o.o. (“Komex” or “the Company”) – a chain of retail stores offering children clothing under the brand name “5.10.15” has been acquired by DBG Eastern Europe II LP (“DBG”) and 3TS Central European Fund II (“3TS”).

On 17 August 2006 DBG and 3TS completed a transaction acquiring a majority shareholding in Komex. The Company is the operator of over 50 stores under the brand name “5.10.15”. Komex is one of the largest retail chains of stores in Poland offering exclusively children’s clothing. DBG and 3TS acquired shares from the existing shareholder and increased capital to finance further expansion.

Jacek Korpala, a Partner at DBG and Zbigniew Łapiński, 3TS Director stated, „We are impressed by Komex’s development over the last few years, which transformed the Company from small retailer to a significant player in its market segment. We believe that Komex is well positioned to maintain its high growth in the future through continued expansion of its presence in the larger Polish cities at the same time retaining a high quality of products offered.

Finergis lnvestments, the holding company controlled by DBG Eastern Europe II, LP (“DBG”) has sold its 17% minority shareholding in Eurofilms SA, one of the largest producers of stretch films in Poland, during its recent IPO.

On June 6, 2006, the management of Eurofilms announced that the IPO of Eurofilms was a great success. Private investors subscribed for over five times more shares than were offered. New shares issued brought Eurofilms over PLN 16 M in new capital. Eurofilms plans to use this money to finance capital investments in order to significantly increase its production of stretch and PVC thermoshrink films. In addition to the newly issued shares were also sold by the existing shareholders: (i) Ergis, disposed of only a small part of its shares, thus it shall keep a majority shareholding in Eurofilms post IPO; and (ii) Finergis lnvestments sold all of its shares.

DBG’s partial exit of Eurofilms follows it’s partial exit of Flanco, a leading Romanian electrical retailer, to the largest Romanian IT retailer and distributor, Flamingo in early May. Flamingo is listed on the Bucharest Stock Exchange. DBG has retained a significant indirect stake in Flamingo.
Jacek Korpala, a Partner at DBG stated, „We are happy that stock exchange investors shared our positive view and belief about future prospects of the Company. Although DBG has indirectly sold its minority shareholding in Eurofilms, we are still majority shareholder in Ergis (through Finergis Investments), which controls Eurofilms. We are convinced that Eurofilms is capable to grow export sales and strengthen its position on the Polish market. We hope that Eurofilms shall be a successful investment for both existing and new shareholders.”

Czech specialized electric motors manufacturer, VUES Brno a.s. (“VUES”), has been acquired by DBG Eastern Europe II, LP (“DBG”). On April 26, 2006, DBG completed an LBO of a 80% shareholding in VUES through takeover of VUES’ parent ES Brno, s.r.o. Two members of the VUES senior management team have partnered with DBG in the transaction. The transaction size was not disclosed.

VUES, a former electrical machines research institute, is a Czech design, development and production company with focus on high-quality electric motors made to custom specifications. VUES’ clients further integrate its motors into equipment for industries such as robotics, logistics and packaging, electronic assembly, automotive industry, energy or traction.

„We were impressed by the achievements of VUES, which over the past 15 years evolved from a research institute into a dynamic and successful commercial organization while keeping and further developing its technical competence. We have invested in the company with a view to further expand VUES’ position in the industry, primarily through organic growth,” said Jaroslav Horak, a Partner at DBG.

Jiri Havelka, General Manager of VUES stated, „We will continue to develop and supply high-quality products for European markets. With the backing of a strong financial investor we intend to increase the range of our customers and further expand our market position.”