The electronics and home appliances chains, the Romanian market's performers in the last few years, have drawn the attention of the investment funds. Whereas Altex and Flanco used to be the most often mentioned names on this market last year, it now looks like the first such deal will be concluded by another chain, Domo. This company will receive a capital inflow from an investment fund following successive transactions and will become shareholder of a consumer finance company.
Romanian American Enterprise Fund (RAEF), one of the leading investment funds on the Romanian market is about to buy some 15-20% in the company that owns the Domo store chain, market sources say.
This is a complex transaction and will end in the development of a consumer finance company, either the one held by RAEF (Ralfi) or a new entity established by Domo and Ralfi.
The quoted sources say the deal, which has reached an advanced stage and could be closed this month, will also include an operation that will see Domo buying about 20% in Ralfi.
"Now that the interest in home appliances and electronics retail has risen, Domo has received offers from various potential investors," stated Lorand Szarvadi, chief executive of Domo Retail, the company that owns the Domo store chain.
Both Szarvadi and Horia Manda, RAEF's senior vice-president did not care to comment on the transactions.
The RAEF official announced several months ago that the fund was preparing for a strategic partnership with one of the home appliances chains on the market.
A potential obstacle towards this transaction was that Interexpo, the owner of the Domo network was involved in both retail operations through its Domo stores and in wholesale.
It has recently split its business into two standalone companies, one of which set to pursue retail operations and the other involved in logistics and distribution.
"Domo Group went on with its streamlining and efficiency-boosting process started last year by separating the retail and wholesale activities," Szarvadi explains.
As of July, Domo Retail SA, the rightful successor of Interexpo focuses exclusively on retail and co-ordinates the activity of the 104 Domo stores in 64 cities that total a 30,000 sqm commercial area.
Domo Distribution Group SRL, a newly established entity, wholesales to independent merchants and the hypermarket and cash & carry segment, working with about 200 stores.
"The two companies are held by the same shareholders at the moment," Szarvadi added.
RAEF may very well be buying only into the retail company.
Under the circumstances, the main stake of the transaction seems to be the development of a consumer finance company that should service Domo chain's clients at first.
Consumer lending was the drive behind the boom of the Romanian electronics and home appliances market last year.
Subsequently, whereas the overall market growth would be somewhere in the neighbourhood of 15%-20% in the last few years, the market simply surged to 550 million euros in 2003, thus progressing by almost 70%.
ionut.bonoiu@zf.ro
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