Private equity fund manager and central and eastern Europe specialist, ForeVest Capital Partners, has closed a general partner-led secondary transaction of a fund on which it advises, PineBridge New Europe Partners II, LP (NEP II).
In this transaction, a new investment fund, advised by ForeVest, has acquired portfolio companies from NEP II. The Strategic Equity team of EUR32.9 billion specialist asset manager Intermediate Capital Group (ICG) led the transaction from the buyer’s side and has become the largest investor in the new fund.
Forevest Capital Partners specialises in growth equity investing in Central Europe and partners with entrepreneurs in local mid- market companies.
They specialise in control investments and influential minority and have invested more than USD1.2 billion in over 20 mid-market companies across CEE and are managing over USD100 million in private equity investments in other emerging markets.
ForeVest founding partners Artur Haze and Pierre Mellinger (pictured) explain that their business came out of AIG, via PineBridge.
“Two years ago, PineBridge re-centred on listed equities and fixed income and asked us to consider separating the direct private equity into an outside platform,” says Mellinger.
The new platform included the Europe fund and other legacy investments in Russia, Turkey and Latin America.
“The story is that we had the NEP II fund from 2006 which was partially invested prior to the financial crisis and partially after the financial crisis but clearly it suffered from the crisis,” Mellinger explains. “We were entering a period of 11 years where there had already been one extension on the fund and we were discussing with our LPs another extension on the fund when the question came up whether the LPs would be interested in liquidity rather than extending again.”
ForeVest brought in advisers to work out what to do and the result was that ICG came in, bought out the largest part of the portfolio and NEP II A was created.
The portfolio is dominated by Polish firms with examples such as Promedica Care, a provider of live-in homecare services for the elderly, supplying care personnel from Central Europe to Germany and other European markets.
Earlier this week, index provider FTSE Russell reclassified Poland from Emerging Market to Developed Market meaning that Poland is classified as one of the 25 most advanced global economies including the USA, UK, Germany, France, Japan, Australia.
FTSE Russell writes that Poland is the first country in almost a decade, and the first Central and Eastern European country to be upgraded to Developed Market status.
Haze says: “It’s a good investment because we are all getting older and want to stay at home rather than going to elderly care homes. We invested in this company seven years ago and sales are up by eight times since we invested.”
Another investment in the portfolio is Integer Group, an independent Polish postal and courier operator, which also offers a parcel delivery solution through automatic parcel machines.
Mellinger says: “This is a company with a very big network of 3,000 places in Poland and it is an integral part of e-commerce operating in Poland. We invested in this company and increased its capital.
“Within central Europe today, Poland is the largest integrated and high growth country. It’s no longer central Europe as it has integrated with western Europe, so investing in Poland also gives you also an indirect exposure to Germany because of the interconnections of the economies.”
Mellinger says that the restructuring of the NEP II fund was a long process and ForeVest is one of the first to do this.
“Giving liquidity for LPs is becoming more and more the norm,” he says. “We spent a lot of time and energy on this with a transparent process and a high quality investor with whom we have a good relationship. We have been able to grow our assets and have gained financial support.
“The other side is that we are developing our relationship with ICG which may allow us to look at new investments as well.”
