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Enterprise Investors makes 9x on Kruk

The CEE-focused firm has sold the remainder of its shares in the Polish debt collector, less than a year after holding a first close on its Fund VII.

Poland-based Enterprise Investors has sold its remaining 24.8 percent share in Kruk, a debt collection agency, on the Warsaw stock exchange. 
                 
The transaction will allow Enterprise Investors to net a 9x return on its investment in the company, according to market sources.  The firm declined to comment on returns. 

Kruk was first floated in 2011, through a €92 million IPO that saw Enterprise reduce its holding from 78.5 percent to 24.8 percent. The offering, through which Enterprise Investors offloaded 8.2 million shares at PLZ 39.7 (€4.8, $6.2) per share, brought an initial return of 8x to the firm. 

The latest share sale reached PLZ 60 a share, allowing Enterprise Investors to cash in a further $76 million in proceeds. 

We started thinking about the exit and talked to a number of strategic buyers. We didn't like the offer of any of them so we decided to go public

Dariusz Pronczuk

The firm first invested in Kruk, Poland’s largest debt collector, in May 2003. The market was almost non-existent at the time, Dariusz Pronczuk, managing partner of Enterprise Investors, told Private Equity International. “We saw this opportunity to be an advisor in a consumer finance business, where many problems related to non-performing loans could soon materialise.”

After increasing Kruk’s capital base and equipping it with new risk management and valuation functions, Enterprise backed the internationalisation strategy of the company, Pronczuk explained. Kruk opened in Romania in 2005, and is now looking to expand into Czech Republic and Slovakia, he said. The company is also in the early stages of assessing potential opportunities in Russia, Turkey and Spain. 

This promising growth outlook offered a window of opportunity to sell the company, Pronczuk said. “After being in the company for six or seven years, we started thinking about the exit and talked to a number of strategic buyers. We didn't like the offer of any of them so we decided to go public, which we did two years ago.”

The final share sale is Enterprise Investors’ second exit in less than 6 months, after it divested its stake in Polish domestic appliances maker Zelmer last November. The firm netted an estimated 3x return on the transaction. 

Kruk was an investment made by the firm’s Fund IV, which closed on $217 million in 2000. It is currently raising Fund VII, which has a target of €650 million. 

Founded in 1990, Enterprise Investors is the oldest private equity firm focused on Central and Eastern Europe. It manages $2 billion of assets, and has 30 remaining companies in its portfolio.