Venture Capital/Private Capital Investments in CEE

Transcription

1 Venture Capital/Private Capital Investments in CEE 3TS Case Studies TMT.Ventures 07 Prague 26 September

2 3TS CAPITAL PARTNERS 3TS Capital Partners is one of the leading Private Equity and Venture Capital firms in CEE currently advising two regional funds Founded in 1999 Fund I - TCEE Funds, 66 M capital (since 1999) Fund II - 3TS Central European Fund II, 100 M capital (since 2005) Investors include 3i Group, EBRD, SITRA, KfW, 5E and MPC Team of 12 persons works across the whole CEE from offices in Prague, Warsaw Bucharest, Budapest, and Vienna 2

3 3TS INVESTMENT CRITERIA Primarily Expansion and Growth Stage although other stages are also considered. Primarily TMT (Technology, Media, Telecommunication), however 3TS looks also outside the defined primary focus sectors for prosperous opportunities. Stage Sector Companies that require capital to accelerate growth or to consolidate an industry sector. Ideally these should be established companies with: existing products/services established customer base realizable growth strategy that supports a future exit and relatively complete management team. Profile Business Model Region Prospective successful companies with growth potential and capable of competing in global markets or companies that have the potential to be market leaders in local countries or the region. Primary focus on Central and East European countries. Primary countries Secondary countries 3

4 3TS INVESTEE COMPANIES (50% INTERNATIONAL EXPANSION) 4

5 VENTURE CAPITAL AND PRIVATE EQUITY IN CEE Investment levels growing but still well below WE lack of early stage funding Consolidation of PE market about 80 fund managers in the region, first time funds gone PE teams brands, reputation, proven teams Region recognized as a distinct part of Europe increasing interest from Western fund managers in region Competition limited / friendly competitors reasonable money supply less competition than in Western Europe 5

6 VENTURE CAPITAL AND PRIVATE EQUITY IN CEE Economic growth CEE GDP 2005 growth rates over 5% vs. 1.5% in Euro zone economic integration with the EU more business friendly tax and labour environment, political stability, improving country ratings Market maturity risk reduction Larger transaction size More success stories stronger deal flow (more exits by first generation founders) Availability of leverage Multiple exit routes trade sales (western buyers attracted by growth prospects + low costs; as well as local strategics), IPOs - WSE, more PE secondary buy-outs; recapitalizations Experienced management teams, but still hungry 6

7 WHY TO INVEST INTO CEE TMT COMPANIES? Economic growth, friendly business environment, EU integration Experienced management teams Success stories, repeat entrepreneurs Globally competitive technologists supply of local talent 7

8 3TS EXAMPLES OF REGIONAL EXPANSION SUPPORT PXP: Regional e-business solutions provider Investment in 2004 to support regional expansion. Acquisitions in the Czech Republic and in Austria. Market leader in Austria. MobilAsk: Regional leader in mobile phone repair Investment in 2000 to support growth of this originally Hungarian company. Acquisitions in the Czech Republic and Slovakia, now leader in three markets. HQ also moved to Bratislava due to logistics and low costs base. 8

9 3TS EXAMPLES OF REGIONAL EXPANSION SUPPORT CVO Group: Online & offline recruitment Investment in 2001 to build a regional recruitment business out of a small Estonian company. Headquarter relocated to Budapest. Expansion through whole Central Europe by setting up own offices and making one Polish acquisition. Also business line expansion from online to traditional recruitment and other HR services (payroll services, personnel leasing). Largest regional online and traditional coverage. ClickAd: Polish online media company Investment in 2006 to support the growth of the company. Expansion into Ukraine first established own office and now looking to acquire. Market leader in Poland. 9

10 3TS - WORLDWIDE EXPANSION SUPPORT Systinet: SOA software Investment in 2001 to support the international expansion of this Czech company. Relocation of the headquarters to Cambridge (Boston), MA, US and inclusion of a US co-investor. Successful exit via trade sale to US listed Mercury Interactive (now HP) in LogMeIn: Remote access solutions Investment in 2004 to support the international expansion of this Hungarian company. Relocation of the headquarters to Boston, US and inclusion of two US co-investors. Now LogMeIn is the world s largest and fastest growing on-demand access service with more than 25 million users. 10

11 3TS SUCCESS STORY INVESTMENT IN POLAND Śląska Telewizja Kablowa Buy-out Funds advised by 3TS invested in 2002 and exited successfully via a trade sale in Company STK is a cable television service provider in Southern Poland. Strategy Using its state-of-the-art fibre network the Company aimed to increase penetration rates and increase revenue per customer. The focus of STK was on introducing new services as well as becoming key consolidation player on the Polish CATV market. Investment structure Consortium led by 3TS Capital Partners conducted a buy-out of strategic investor from the company. EXIT 2002 CAGR* 2005 * annual ** all type Key financial and non-financial indicators for ŚTK Homes passed Subscribers** Revenues EBITDA Funds advised by 3TS divested in 2005 through a trade sale to Vectra second largest CATV in Poland. 120k 150k 10% 65k 93.5k 4.6m 6.4m 1.5m 18% 16% 21% 2.3m 11

12 3TS SUCCESS STORY INVESTMENT IN CZ, SK, HU Mobil ASK Expansion Funds advised by 3TS invested in 2000 Company Mobil ASK offers after-sales service of mobile phones in CZ, SK a HU. Key financial and non-financial indicators for Mobil ASK Strategy Originally Hungarian company expanded through acquisitions in CZ and SK, at present time a leader on all these markets. Extension of covered brands formerly only Nokia, now also Motorola, LG, Samsung, HTC Brands Employees Revenues Nokia only m Investment structure 3TS Capital Partners provided resources for regional expansion and supported the company in performed acquisitions Nokia Motorola Samsun g HTC LG m 12

13 CASE STUDY INVESTMENT IN POLAND ClickAd - MBO Company ClickAd is the largest on-line media company and provides services to agencies and corporate clients supporting them in planning, buying and managing online advertising. The company works for many global and local high-profile brands managing approx. 150 campaigns annually. Strategy & Plans ClickAd s strategy assumes: Further development of existing products Introducing innovative products to existing customers Geographical expansion nvestment structure Buy-out using mix of equity and convertible debt 3TS is a strong new partner for us and they will enable our company to launch new products, acquire new technologies and further improve the quality of our services in Poland as well as to expand into other markets. Maciej Sobierajski, CEO of ClickAd Revenues EBITDA Net Profit Financials m 1.1m 0.9m ClickAd, jointly owned by the management team and 3TS, has the people, skills and market savvy to excel in this important segment of the market. We look forward to being part of this exciting effort on the fast growing online advertising market in Poland and other countries in the region Piotr Nocen, Investment Director at 3TS 13

14 CASE STUDY INVESTMENT IN HUNGARY LogMeIn Expansion capital Company LogMeIn is the largest global remote connectivity software and service provider (mainly to mobile professionals, helpdesk and system administrators) founded in Budapest and headquartered in Boston. 3TS was the first institutional investor, followed by US VCs such as Prism Ventures, Integral Capital and Polaris Strategy & Plans The company strategy assumes: Revenues $ 1.0 m around $ 30 m Taking the leading global position through active marketing Position LogMeIn as a US company, headquarters relocated to Boston Continous product development Expansion through add on acquisitions. Users over 25 m nvestment structure 3TS has provided growth capital and supported the company in followon fundraisings and expansion into the US. 14

15 3TS SUCCESS STORY INVESTMENT IN CZ Systinet Expansion Company Systinet is software business in area of Service Oriented Architecture providing products via development centre in Prague (over 100 developers) a headquarters in Boston, US. Strategy a plans Strategy of Systinet: Development of a globally competitive product with development team in CEE Customer portfolio many blue chip global corporations (mainly US) nvestment structure Several rounds of funding with investment partners (Esther Dyson, Windcrest Partners, Warburg Pincus). Company founded Acquirer Exit Value 2000 Development in Prague, S&M in Boston 2006 Mercury Interactive US$ 105m EXIT Funds advised by 3TS realized exit in 2006 via trade sale to Mercury Interactive software company listed on Nasdaq, Mercury has been in several months acquired by Hewlett Packard. 15

16 SYSTINET INVESTMENT CASE I Key Assumptions: Systinet pre-investment Early stage investment into a company with leading edge technology and development team At the same time key manager dependence (an experienced CEO with successful track record) and few customers prior to investment Establish sales and marketing in the US (and a US entity) in order to increase credibility with customers and improve visibility to potential buyers 16

17 SYSTINET INVESTMENT CASE II Major Changes: Systinet managed to establish leading position in the industry (numerous awards e.g. 50 hottest Tech companies by Time 2002): Before finishing product they initiated discussions with potential early adopters and positioned product in order to fit their needs. In sales Systinet focused first on generating blue chip reference customers and gaining visibility. Web Services/Service Oriented Architecture took longer to get significant market adoption; Management team - founder recruited strong management team and hired experienced professionals for key positions; US presence sales, marketing and business development; development team of 80 programmers in Prague, CZ 17

18 SYSTINET INVESTMENT CASE III Issues for Exit: Exited in early 2006 The Company in exit discussions with several strategics The transaction concluded with Mercury Interactive (MERQ) - 100% cash deal US$ 105 million Mercury later in 2006 acquired by HP 18

19 3TS CONTACTS 3TS would like to thank you for the opportunity to make this presentation. Prague 3TS Capital Partners Václavská 12 Praha 2, Czech Republic Tel Fax Contact persons: Jiri Benes Daniel Lynch Warsaw 3TS Capital Partners ul. Ogrodowa Warszawa Poland Tel Fax Budapest 3TS Capital Partners Brassai Sámuel u. 16 H-1126 Budapest Hungary Tel Fax info@3tscapital.com Vienna 3TS Capital Partners Tech Gate Tower Donau-City Strasse 1 A-1220 Vienna Austria Tel Fax info@3tscapital.com Bucharest 3TS Capital Partners Bucharest Romania Tel info@3tscapital.com 19