Reconstruction Capital II (RC2), a private equity fund with 75m euros' worth of investments in Romania, has multiplied the capital invested in Albalact by four times, and expects returns and growth in fields its rivals chose to ignore.
"We choose situations and fields that are not competitive - companies that are targeted less by rival players on the domestic private equity market, and we also identify niches with potential growth. Our fund's current portfolio stands proof: Top Factoring, a receivables management firm, Albalact, a dairy producer, and Antares Hotel, while, as a rule, private equity funds usually avoid the hotel sector," says Ion Florescu, manager of New Europe Capital (NEC), which manages the RC2 fund.
The fund's first investment in Romania was also its most profitable, after it acquired a minority stake in Albalact two years ago, which brought a 400% return at the moment of exit.
Listed on the London Stock Exchange, RC2 entered the Romanian market in 2006 through an investment in Albalact, followed by investments in Top Factoring, Romar and Antares Hotel. In the first half of 2007, RC2 acquired 92.3% in Top Factoring and a 33.3% stake in Romar Grup, a private medical services group. RC2 invested 3m euros in the two deals.
In 2008, the fund's list of acquisitions included Antares Hotel, where the fund bought a 63% stake in the wake of investments worth 8m euros. Centrul Medical Unirea also stirred the fund's interest, but the deal was not reached because of the high price involved.
At present, RC2 investments in Romania amount to 75m euros, "half being invested in listed companies and half in unlisted ones".
"At present, the fund's assets stand at 150m euros, of which 75m euros are invested in Romania, 5m euros in Serbia and Bulgaria and the remaining 70m euros are cash (...)," said Florescu.
The fund's strategy is to earmark two thirds of the assets for investments in unlisted firms, with the other third being invested in listed firms. Thus, the fund's investments will be mainly directed towards unlisted firms this year.
A large portion of the 70m-euro investment capital will be destined to Romania, with the local market, rather than Serbia, on the fund's priority list.
"This year, we decided to boost average investments per company and we target medium-sized companies (...)," added Florescu, who chose not to specify the targets in his sights.
The fund's business model directs investment capital in two channels: development and reconstruction. The development capital is used for investments in firms "doing well", while the reconstruction capital goes to firms in need of operation restructuring.
Besides RC2 targeting construction materials, financial services, and logistics, "infrastructure will also be at the centre of private equity investors' attention in the following years," explained Florescu.
RC2
Entered the Romanian market in 2006 through the investment in Albalact, followed by investments in Top Factoring, Romar and Antares Hotels
At present, RC2 investments in Romania amount to 75m euros, "half of which are invested in listed companies and half in unlisted ones"
At present, the fund's assets stand at 150m euros, of which 75m euros are invested in Romania, 5m euros in Serbia and Bulgaria and the remaining 70m euros are in cash
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