Central Europes third-largest

Polish Enterprise Fund V, a private equity fund managed by Enterprise Investors, has completed the third biggest buyout in Central and Eastern Europe. It invested €54m in equity for an 80% stake in DGS, a Polish bottle top manufacturer. The rest of the €96m buyout was financed by a loan from Bank Pekao and Bank Zachodni.

Krzysztof Grzdziel, president and one of DGS’s founding shareholders, is the force behind the company. He will retain the remaining 20% of the shares post-buyout. PEF V has received permission from the Polish Anti-Monopoly Office to complete the transaction.

The CEE market is in the embryonic stages, although the €1.2bn buyout of Bulgarian telecom company MobilTel ranked as one of last year’s largest European buyouts. Enterprise Investors is one of the largest private equity firms in the region, with US$1.1bn under management across its five funds.

These vehicles have invested and committed more than US$800m in nearly 100 businesses in Poland and the CEE region. Activity includes the US$12m acquisition of 100% of Nomi in December 2003, which was financed 50% with bank debt. The €26m buyout of 75% of Harper Hygienics in June 2004 was 32% financed by banks.

DGS is located in Poland, and has been active since 1991 as a manufacturer of metal closures for alcoholic beverage bottles and for glass jars. The company is the leader in the Polish market and also a significant player in Europe. More than half its profits come from exports to countries of the former Soviet Union and to the EU.

At the same time, Enterprise Investors’ fourth fund has sold its stake in MS Stolica, a Polish courier express company. It is one of four selling shareholders, which include United Parcel Service. Completion of the transaction is expected early in the second quarter of 2005, subject to regulatory approvals. Enterprise has exited 71 investments and returned US$750m to investors.