Buyout firm DBG Eastern Europe is targeting €125 million ($178 million) for its third fund early next year, according to a partner at the firm.
This is nearly double the size of its €67 million predecessor fund. The first close will not take long as there is a lot of investor interest, Jacek Korpala, a partner at DBG, said.
The changing fortunes of central and eastern European business, spurred on by the enlargement of the European Union, are driving interest in the firm’s latest fund, he said.
“There is easier access to leverage and management teams are more mature in central and eastern Europe now. It is generally easier to do business and it is becoming comparable to western Europe,” Korpala said.
“The only difference is the size of the companies. Our sector, the €10 million to 50 million market, would be regarded as small cap in the West but here it is the lower middle market.”
DBG has also bought two German plastic packaging companies MKF Folien and Schimanski to merge with its eastern European portfolio company Ergis-Eurofilms for €27.4 million.
MKF Folien plastics are used in the food and technical sectors. It had revenues of €39.8 million and €3.6 million EBITDA in 2006. In the first half of 2007. these results were €22.5 million and €2 million respectively.
Schimanski's products are used mainly in the food sector. It had €28.3 million of revenues and €2.8 million EBITDA in 2006. In the first half of 2007 it had €13.5 million revenues and €1.4 million EBITDA.
As part of the transaction the owners of the acquired companies will take a 6.3 percent stake in Ergis-Eurofilms. DBG retains a majority stake in the company.
Korpala said the acquisition would expand Ergis’ PVC plastics business and would diversify its product range to include PET, another type of plastic.