Stelian Dragan, the new chief investment officer of private equity firm Global Finance, says that his strategy does not only target companies in sectors less affected by the crisis and that yields of investment funds will be "quite good" in the coming years, too.
"There are opportunities because multiples have gone down, because there is a business plan and money to help this business plan. The market is set to rebound in four to six years, which is why one may say that the yield will be quite good," Dragan said.
Greek investment fund Global Finance entered Romania in 1996, one of the key markets in the region. That year the company managed a number of local investments, including ice-cream producer Delta, furniture maker Neoset and dye maker Romcolor. Global Finance’s local businesses over the years have included mobile telephony operator Orange, pharmaceuticals producer Sicomed, supermarket chain La Fourmi and MobilRom.
Dragan, 37, has recently taken over the management of Global Finance’s local office, after having worked at investment bank Bear Stearns & Co, and at Deutsche Bank Securities (the investment banking division of Germany-based Deutsche Bank). He replaces Stefan Bucataru, one of the people with the longest involvement in the local private equity industry, who, according to Global Finance, left the company at the end of last year.
The attractiveness of the local companies, Dragan feels, has increased as the evaluation multiples started to go down.
"We are looking at two different periods of the market. One that lasted until six or nine months ago, when entry levels were very high because of competition, and now we are looking at a market stage where multiples have gone down. Opportunities existed back then, too, but companies are even more attractive now," believes the head of Global Finance’s local office.
On the other hand, the increase in the number of offers on the desk of chief investment officers also stems from the more difficult access to bank financing, which makes entrepreneurs look at new ways to finance their businesses, with one such option being the sale of shares to an investment fund.
"Romania had two very good years in 2007 and 2008. We believe that those levels will be more or less difficult to repeat in the near future. There will be deals this year, probably in the second half, with the necessary adjustments. Which means assessments closer to the market reality," Dragan added.
He feels that there may also be opportunities for acquisitions in the sectors affected by the crisis.
Dragan worked for more than one year at the Bear Stearns & Co investment bank as investment banking vice-president and left it after the collapse of the US giant.
"We need to look at America a bit and at the developed economies to realise that this type of crisis that started with financial institutions does not have only one step. There is actually a succession of steps that unfolds in time. I saw this succession in the US, when Bear Stearns went down and then the collapse of several financial institutions in a row. I have not seen that in Romania yet, but clearly I have not seen it all. Things will happen from now on, too, and they will not necessarily be good," the former investment banker says.
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