About Us
ARX Equity Partners is an independent private equity investor that
supports the growth of mid-sized companies in Central and Eastern
Europe. ARX teams up with owners, managers and other stakeholders with
the aim of realising the full potential of our portfolio companies,
while achieving superior returns for our investors and partner
entrepreneurs. The investors in the dedicated family of funds managed by
ARX consist of blue-chip global financial institutions.
The ARX Team has been investing in the CEE Region since 1997. Since
then, ARX has completed more than 30 transactions in 6 CEE countries.
The ARX Team, which is entirely based in 4 local offices in the CEE
region, possesses a deep and reliable investment track-record.
We are professionally and personally dedicated to CEE, and we are
passionate in our approach to realising entrepreneurial aspirations. We
systematically build a high level of mutual trust and integrity with all
of our business partners, such as business owners, managers,
intermediaries, banks and advisors. ARX is a long-term player on the CEE
investment landscape, and our references in the market reflect years of
dedication in building successful business partnerships
Investment Philosophy
- At ARX we believe in the power of successful partnerships. Our primary goal is to partner with owners and managers in releasing growth potential and to rapidly develop Central and Eastern European businesses. Our firm also provides financing to entrepreneurially-minded managers in order to realise management buy-out and management buy-in (MBO & MBI) projects.
- At ARX we also pride ourselves in our ability to create flexible investment solutions for owner-managers. We tailor our solutions in order to satisfy the needs of business owners who may be approaching gradual or phased succession situations. Most of the businesses we invest into or acquire are management or family-owned enterprises, which often require complex and discrete financing solutions. Our firm is experienced in providing such solutions.
- Our portfolio companies are engaged in the production of both consumer and industrial goods, the provision of consumer and business services, healthcare services, and retail / distribution.
Partnership and Independence
- We are purely focused on increasing shareholder value for the investors in our funds and correspondingly for the partners and co-shareholders in each portfolio company. Our objective is value-creation and this approach is transparent to all parties.
- The alignment of incentives is a fundamental success factor in ARX partnerships. Our desire is to provide attractive financial and non-financial incentives to talented and ambitious managers and entrepreneurs. Financial incentives generally consist of equity and equity-linked incentive plans that are designed to align all stakeholders toward common long-term targets. Non-financial incentives include clarity and consistency of approach, a high level of autonomy for managers and an ability to react quickly in a dynamic environment. ARX is a reliable investment partner, with a fast, independent and transparent decision making structure.
Track Record
- We have been active in our local markets of CEE for 15 years, completing more than 30 transactions. We work closely with owners, managers, local communities, and other stakeholders across many industries; ultimately to deliver superior value. As a policy, we encourage our potential business partners to seek references on ARX and our track-record.
General Approach
- We invest in companies meeting the following criteria:
- Medium-sized companies with strong positions in attractive industries,
- History of sales growth and profitability at EBITDA level,
- Strong and motivated management that can grow the company further to the next level of development.
- We invest typically in the following situations:
- Some or all of the owners would like to withdraw from the business and pursue other business or life opportunities,
- Managers of the company would like to grow the company further and become co-owners of the business (management buy-out or MBO),
- An outside management team would like to buy a company with our support (management buy-in or MBI),
- A corporation decides to divest its subsidiary,
- A company seeks growth capital that would allow it to further strengthen its market position by building up production capacity, acquiring a competitor or other complementary business (either CEE or Western player), introducing new products, or entering new markets.
Investment Criteria
- We invest a minimum of € 5 million per project by increasing the capital of the company or by purchasing existing shares from the owners.
- We are a medium to long-term investor, partnering with companies typically for 3-6 years.
- We take both minority and majority stakes.
- We invest equity capital, and do not provide debt solutions, although we work closely with banks and other financial institutions to secure optimal short-term or long-term financing to satisfy tailored capital requirements for each ARX portfolio company.
- We invest in companies engaged in the production of both consumer and industrial goods, the provision of consumer and business services, healthcare services, and retail / distribution.
Portfolio Support
We do not seek involvement in the day-to-day operations of ARX portfolio companies. On the contrary, our aim is to form valuable partnerships with highly motivated entrepreneurs and company managers where ARX plays an active non-executive role in supporting with strategic advice, access to international contacts, industry expertise and eventual exit planning. In addition, we often assist our portfolio companies in identifying and completing complementary value-creating add-on acquisitions.
- We bring our experience of completing over 30 transactions in
local CEE markets, across many industries. ARX shares its experience
with our business partners in areas such as:
- Diverse ownership and transactional situations,
- Numerous strategic discussions on expansion options where weighing benefits and risks is an essential success factor,
- Leveraging the ARX CEE banking sector credibility and network in order to secure optimal debt financing terms in order to fund expansion and add-on acquisitions,
- Planning and execution of eventual successful exits.
- We possess an extensive network in CEE and beyond, enabling ARX to assist its portfolio companies in establishing business contacts in many countries.
Ergis-Eurofilms
In early 2002 ARX was introduced to Ergis and its CEO Tadeusz Nowicki by Marek Górski, previously chairman of the Ergis supervisory board. At that time the company was owned by a number of Polish Privatization Funds (NFI), Polish State Treasury and employees. It produced mainly films for the broadly defined construction and decorative sectors.
The managers identified the opportunity for a leveraged buy-out that could arise from the company’s fragmented ownership structure, strong interest of key shareholders in divesting their stakes relatively quickly and limited visibility of Ergis value creation potential due to ongoing restructuring process.
Ergis Group was comprised at that time of several companies and production sites. The CEO had the vision to modernise the Group and to develop it to become a leading producer of packaging films in Central and Eastern Europe.
The managers understood that their aspirations could not be materialised without support of a new business partner. This new business partner was required to bring capital as well as strategic support needed by the managers to grow the business further.
In 2003, ARX partnered with Marek Górski and Tadeusz Nowicki in the buy-out of Ergis. The transaction was implemented in the years 2003 – 2004. In result the managers became co-owners of the business.
Since the date of the initial ARX investment, Ergis has:
- Tripled annual revenues from € 50 million in 2003 to € 150 million in 2011,
- Successfully floated Eurofilms (its former subsidiary) on the WSE in June 2006 and subsequently become listed after a reverse takeover of Eurofilms in June 2007,
- Identified and executed complementary add-on acquisitions in Poland and Germany (Flexergis, MKF Folien and Schimanski in 2007),
- Become an important supplier of packaging films to the food processing industry, and
- Introduced new products such as multilayer laminated PET rigid films and multilayer stretch films while also expanding its presence on the Western European market.
Lexum
In 2008 ARX was introduced to Professor Martin Filipec, the key founder of Lexum, which is the largest chain of ophthalmology clinics in the Czech Republic. Lexum performs a variety of eye surgeries such as laser refractive procedures, cataract surgeries and vitro-retinal operations.
The company was owned at the time by a small group of individual shareholders who – with the exception of Professor Filipec – had become increasingly passive owners who preferred an immediate exit rather than maintaining a longer-term ownership position. Professor Filipec described his entrepreneurial aspiration to ARX: to solidify and grow Lexum’s leading market position in the Czech Republic, expand into other CEE countries and to maintain an ongoing commitment to provide top-tier medical care for patients.
In early 2009, ARX partnered with Professor Filipec in a transaction that provided the desired full exit for the more passive owners, while also committing follow-on capital for the future expansion of Lexum. ARX was also instrumental in concurrently securing long-term debt financing for the business.
Since the date of the initial ARX investment, Lexum has:
- Identified and executed a complementary add-on acquisition in Poland (acquired by Lexum in early 2010),
- Increased the total number of Lexum clinics in CEE from 3 to 10,
- Grown revenues from € 11 million in 2008 to € 18 million in 2011,
- Solidified its position as the largest eye surgery business in the CEE region,
- Secured a strategic investor (Moonray Healthcare) in December 2012, and
- Continued to provide the highest quality of patient care.
Donit Tesnit
In late 2005 ARX was introduced to three majority owner-managers of Donit Tesnit. Donit Tesnit is a Slovenian manufacturer of industrial sealing materials and gaskets, with a long history of innovation, quality and reliability in mission-critical applications. ARX was attracted by the fact that Donit Tesnit is one of the European market leaders in a niche industry where production know-how, reliability and quality are key success factors.
The majority owner-managers were of differing ages and, as such, their perspectives on the business and career horizons began to diverge. The younger mangers had formulated a clear plan for value-creation over the medium-term, while the older senior manager was preparing for retirement. The challenge for ARX was to construct a discreet and timely transaction that satisfied the aspirations of the entire owner-manager group.
In early 2006, ARX partnered with the two younger owner-managers in a transaction that facilitated the desired full exit for the older owner, while introducing ARX as a new supportive majority shareholder with a clearly aligned focus on achieving the medium-term strategic plan for the company. In addition, ARX secured tailored senior debt facilities that supported the objectives of the strategy.
During the period of the ARX investment, Donit Tesnit:
- Optimized its product portfolio and increased the proportion of sales of high-margin products,
- Generated above market average sales growth of 10% per annum,
- Streamlined its ownership structure,
- Improved working capital utilization, and
- Consolidated production and real-estate assets while creating efficiencies.
Company Country Transaction Investment year Status Business Czech Republic MBI / Expansion 2011 Current Industrial measurement and control systems Czech Republic Add-on to Bochemie 2011 Current Insecticides Czech Republic Add-on to KVK 2011 Current Construction materials Poland Add-on to Kakadu 2010 Current Pet products internet store Czech Republic Buy and Build 2010 Current Household care and specialty chemicals Czech Republic MBO 2010 Current Manufacturer of construction materials Poland Add-on to Lexum 2010 Current Healthcare (ophthalmology clinics) Czech Republic Succession / MBO 2009 Current Healthcare (ophthalmology clinics) Poland Buy and Build 2009 Current Pet food retail chain Slovenia Add-on to Tomplast 2008 Current Rubber and plastic components Czech Republic Succession / MBO 2008 Current Manufacturer of ropes and flexible packaging Czech Republic Add-on to Lanex 2008 Current Producer of climbing and fall protection equipment Hungary Expansion 2007 Realized Leasing and financial services Slovenia MBI 2007 Current Manufacturer of plastic-moulded components Poland MBO / Expansion 2006 Current Children’s clothing retailer Czech Republic MBO 2006 Current Manufacturer of specialized electric motors Slovenia MBO 2006 Realized Producer of gasket material and industrial gaskets Romania Buy-out 2004 Realized IT and household electricals retailer and distributor Poland MBO 2003 Current Plastics processor Czech Republic Expansion 2000 Realized Regional publisher and distributor of computer games Poland Expansion 2000 Realized Insty-Prints' quick printing Master Franchise Hungary MBI / Expansion 1998 Realized Trucking and logistics firm Czech Republic MBO / Expansion 1998 Realized Telecom and internet service provider Poland Buy-out / Expansion 1998 Realized Publishing group source: http://www.arxequity.com/?language=en
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