ARX Equity Partners has fully exited its investment in Polish plastics processor, Ergis Eurofilms, generating an overall internal rate of return of over 33 per cent and 4.5 cash-on-cash multiple.
The ARX exit was executed via a series of block trades to investors on the Warsaw Stock Exchange in December 2013, which followed the partial realisation of the Ergis investment in 2006.
ARX originally acquired a majority shareholding in the packaging company in 2003 in a leveraged management buyout transaction in partnership with Ergis managers Tadeusz Nowicki and Marek Gorski. Several value-creation initiatives have been implemented during the period of ARX ownership, including the relocation and consolidation of production sites, divestments of non-core assets and the completion of three complementary add-on acquisitions. Ergis revenues tripled during the period of ARX ownership, growing to more than EUR153m in 2012, and today the company generates more than half of its revenues outside Poland.
ARX co-managing partner Jacek Korpala says: “Our investment in Ergis is an excellent example of the long-term value-creation potential of the CEE lower mid-market. Key pillars of the ARX investment strategy were successfully implemented in Ergis, including the formation of a successful partnership with management and creating value through add-on acquisitions."
