Enterprise Investors raises €314m for Fund VII

The Polish firm’s final close – below its €650m target – comes after a string of exits by previous vehicles.

Warsaw-based Enterprise Investors has reached a €314 million final close on its latest fund, Polish Enterprise Fund VII. The fund had an original target of €650 million.

The vehicle is the second-largest the firm has ever raised, but it is also less than half the size of its predecessor, a 2006-vintage that closed on €658 million. 

Fund VII’s investor base is mostly made of existing LPs, Enterprise Investors said in a statement. The only publicly known LP in Fund VII is the European Bank for Reconstruction and Development, which committed €80 million to the vehicle in March 2012. It was unknown at press time whether the firm had employed a placement agent to help raise Fund VII.

Investors in Enterprise Investors’ Fund VI included Adams Street Partners, Allianz, Alpinvest Partners, CalPERS, European Investment Fund, HarbourVest Partners, LGT Capital Partners, MetLife, Pantheon International Participations, Pantheon Ventures and Partners Group, according to Private Equity International’s Research & Analytics division. 

Fund VII is to follow a similar strategy to that of predecessors, which have largely focused on succession-related and growth capital buyouts of mid-sized, CEE-based companies. 

“We will continue making equity investments ranging mainly from €20 million to €50 million. Similarly to the previous funds, Poland will remain the core market and we expect to invest approximately two-thirds of Polish Enterprise Fund VII in Poland,” commented Jacek Siwicki, president of Enterprise Investors. 

The second main theme will be business process outsourcing, be it IT services or manufacturing, which is moving here again because of the [strong culture behind] engineers and professors

Jacek Siwicki

The firm continues to see opportunities in a variety of sectors, largely driven by the region’s “reconnection” with Western Europe. “The first main theme was clearly consumer spending, from retail and financial services to healthcare and maybe education sometime down the road,” Siwicki told PEI earlier this month. “On the other hand the second main theme will be business process outsourcing, be it IT services or manufacturing, which is moving here again because of the [strong culture behind] engineers and professors.” 

Fund VII, which held a first close in May 2012, has already made two investments of undisclosed amounts in Nu-Med, a group of radiotherapy clinics, and Scitec, a sports nutrition business. 

The fund close and fresh deals follow a period of realisations for the CEE-focused manager. The firm exited four investments in 2012, including AVG Technologies, the first IPO it ever placed on the New York Stock Exchange. It also sold transfer agent ProService, appliance manufacturer Zelmer, and cosmetics maker Bio-Profil last year. 

Its exit momentum has carried over into the first quarter of this year, which included a 10x return on its investment in Magellan, a healthcare-focused lender, as well as a 9x exit from Kruk, a debt collection business. 

As of 30 September 2012, according to public documents from the California Public Employees’ Retirement System (CalPERS), the firm’s seven-year-old Fund VI was valued as having an 0.80x investment multiple, while its 2004-vintage Fund V was valued at 1.9x and its 2000-vintage Fund IV at 2.8x.

Founded in 1990, Enterprise Investors is the oldest buyout firm in Central and Eastern Europe. It has invested €1.6 million in the region since inception, and exited 98 investments, one-third of which were through public markets.

PEI recently went to Warsaw to conduct an in-depth roundtable with CEE private equity insiders – look out for the full story in next June's issue of the magazine.