Frigotehnica, a major player on the market of refrigerating equipment, is in talks with investment fund Balkan Accession Fund (BAF) to expand in the region, with the group to generate 30-40% of revenues from abroad in around three years.
In mid-October, Frigoholding, indirectly controlled by BAF, got the green light from the Competition Council to get complete control over Frigotehnica. According to the two companies' representatives, the deal has not been finalised, yet. "Should the deal be sealed, we'll set up a new company where we'll be partners with them," said Nicolae Bara, Frigotehnica chairman.
Frigotehnica was in talks with two other companies, but BAF investment fund, coordinated by Horia Manda, got to the negotiation table as the plan it proposed overlapped Frigotehnica's plans. "We chose BAF as it already has operations in the countries we want to enter," said Bara, who owns 60% in Frigotehnica.
The market has not witnessed many deals lately, and consultants believe the value of companies has plummeted. However, Bara considers the crisis has not hurt the company's value, though he is unwilling to disclose it.
"Our bringing in a partner has nothing to do with the financial crisis. We started talks before the crisis and I don't believe the sum I could have got would have been higher," said Bara, specifying demand for refrigerating equipment will not wane, though the company is not entirely sheltered from the crisis fallout. This year, the group will register turnover worth 45-46m euros, from 38m euros last year, with the profit margin to stay at around 10%. "However, this trend in not always relevant, as there are many projects we start in a year and finish in another. For next year, we target 10% growth," said Bara.
As for debts to banks, Bara specifies he has a line of credit of around 20 million euros for current activities, but has used around 10% of it.
Frigotehnica's plan entails entrance both on Balkan and West-European markets. Bara sums up the motivation for expansion in several words: "we're going after customers".
Frigotehnica's position could have been challenged at the moment major retail chains entered Romania. " (...) Had we been sleeping, they would have come, but they bumped into a large firm (...)".
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