Enterprise buys bottle-top maker in €96m LBO

The Warsaw private equity firm has acquired an 80 percent stake in Polish bottle top manufacturer DGS, evidence that the LBO market in the region continues to grow.

Polish Enterprise Fund V, Enterprise Investors’ latest private equity vehicle, has bought an 80 percent stake in Polish bottle top manufacturer DGS in a €96 million ($124 million)transaction.

Enterprise invested €54 million of equity. Debt financing for the transaction was provided by Bank Pekao SA and Bank Zachodni WBK. The remaining 20 percent of the company's shareholding is being held by DGS president and founding shareholder Krysztof Grzadiel, according to a press release.

Commenting on the deal, Enterprise partner Michal Riusiecki said: “DGS is a good example of a Polish company that has achieved a significant position in Europe despite modest beginnings.” In 2004 the company’s revenues rose 16 percent to PLN 215 million (€54 million).

The transaction is a further example of the growth currently being experienced by the fledgling Central & Eastern European (CEE) buyout market.

2004 saw the largest ever buyout in CEE to date. The tally included the €1.2 billion ($1.45 billion) takeover of MobilTel Holding, a Bulgarian mobile telephony operator, in which a private equity syndicate led by pan-European private equity firm ABN AMRO Capital invested €450 million for a 40 percent stake in the company. The remaining financing came via a €650 million syndicated corporate loan.

Other significant leveraged transactions in the region include the €280 million buyout of Bulgarian Telecommunications Company by Advent International in June 2004 and the €160 million 2003 acquisition including debt of Aster City Cable by Hicks Muse (Europe), Argus Capital and Emerging Markets Partnership.

Commenting on the rise of leverage in the region in a recent interview, Advent managing director Joanna James said: “It’s not at the same levels as the Western European market – banks aren’t overlending on huge multiples of profit, but they are starting to provide debt funding on terms that are more similar to Western European transactions.”

In related news, Enterprise Investors has also announced the sale of its stake in Polish courier express company MS Stolica to global delivery company United Parcel Service (UPS) for an undisclosed sum. The original investment was made from the firm’s previous fund, Polish Enterprise Fund IV, which raised $300 million (€239 million) in 2000.

Enterprise Investors is currently investing from its fifth fund, the €300 million Polish Enterprise Fund V.