Innova is expecting an interesting year

The fund, owner of Wirtualna Polska, among others, is preparing EUR 50-80 million for this year’s acquisitions. It is itching for consumer and industrial goods. Innova Capital, one of the biggest private equity funds in Poland, recorded good results last year. The fund acquired Wirtualna Polska, Bakalland and Delecta, and sold Libet. Also, closed transactions included the sale of Emitel and GTS. There was much more going on in the fund as compared with the competitors.

“We do have an appetite for more, though. Macroeconomic uncertainty held up decisions involving changes of ownership, and at the same time valuations put forward by owners were still too high,” says Andrzej Bartos, managing partner at Innova Capital.

One of the biggest private equity funds with the longest presence in the Polish market sets high hopes for 2015. It must be even better than last year.

“I expect that this year we will invest EUR 50-80 million in probably 2 or 3 entities,” says Andrzej Bartos. Expanding the portfolio After a successful acquisition of Bakalland and Delecta, the fund’s management are willing to follow the momentum and invest in the consumer goods area. This year seems like the right time to buy a producer of diapers or cosmetics, although consolidation of the two food companies also leaves plenty of scope for more market opportunities.

Bakalland had already announced the desire to expand the healthy snacks portfolio, and a consolidation of companies from a fragmented food industry will make the company achieve economies of scale. Innova will most certainly consider, among others, the possibility of buying Good Food and Sonko – wafer producers in search of an owner.

“We are going to closely monitor candidates for additional acquisitions for Bakalland and Delecta, because we want to develop the brand portfolio of the group,” says Andrzej Bartos. Consumer goods are not everything. For years, Innova has been a strong player in the industrial sector and is monitoring potential acquisitions in this area, leaning however towards services and equipment producers rather than big industry.

“Once the macroeconomic climate stabilises, the conditions will be more favourable for making further investments in the industrial goods sector,” says Andrzej Bartos. Energy sector on hold One thing is certain – this year Innova is not focusing on investment in the energy sector.

“We will wait until the investment boom in the renewable energy sector under the applicable RES Act dies down. When the amount of power is defined, along with its possible impact on future use of the system capabilities and on the financial standing of large energy groups, it will be easier to analyse acquisitions in this area. Incoming information about possible consolidation of the largest operators in this sector add to the uncertainty. We are potentially interested in companies offering services for energy concerns” says Andrzej Bartos.

Warsaw and Bucharest In private equity it is not hard to buy something – the trick is to sell it well. “This year we will probably sell shares in 1 or 2 companies,” announces Andrzej Bartos. The market is buzzing about the IPO of Wirtualna Polska, which we were writing about several months ago. Innova does not refer to this information. A debut on the Bucharest stock exchange is possible for La Fantana, a spring water distributor. Ipopema is to advise on that transaction.

“We refuse to comment on that information. La Fantana is a successful and mature investment. We are considering various scenarios” says Andrzej Bartos. Theoretically, Expander could be up for sale, however the decrease in the stock market valuation of its competitor, Open Finance, indicates that this year may not be the best for exiting the investment in that independent financial adviser.