IK enters Central and Eastern Europe

The European mid-market firm has turned its attention to Central and Eastern Europe with the secondary buyout of a Polish manufacturer of rail freight buffers from Advent. The region is becoming a private equity hotspot, but IK will be proceeding with care.

IK Investment Partners, the European firm formerly known as Industri Kapital, has made its maiden investment in Central and Eastern Europe, paying an undisclosed sum for Polish train part manufacturer Axtone.

It will be a careful approach, not a big bang.

Detlef Dinsel, IK

The value of the transaction, a secondary buyout from Advent International, has not been disclosed, but a source close to the deal said it was in the region of €100 million ($150 million).

Axtone is the product of Advent’s merging of two manufacturers of rail wagon buffers, Polish business Kamax and German operator Keystone Bahntechnik, in January 2006. Axtone forecasts a turnover of over €70 million ($105 million) in 2008.

The transaction is IK’s first direct investment in the region and marks the start of the firm’s plans to invest directly in Poland, Czech Republic, Slovakia, Hungary and the Baltic States, in addition to its current operations in Benelux, France, Germany and Scandinavia.

The Axtone investment is drawn down from IK’s €825 million 2004 fund, which is now over 90 percent invested. IK is also currently investing its 2007 fund, which closed in October 2007 on €1.7 billion.

Detlef Dinsel

Detlef Dinsel, managing partner at IK, said: “Over the last couple of years the CEE markets have become more structured and more like Western Europe. We have plans to increase our exposure to the region, but it will be a careful approach, not a big bang.”

Poland and Romania are expected to see the bulk of private equity activity in the region over the coming year, according to a July Mergermarket report.