Enterprise Investors and CSFB Central European Merchant Partners have sold their remaining interest in Polish aluminium producer, Grupa Kety, on the Warsaw stock exchange. The sale generated proceeds in the region of $17.5 million for Enterprise Investors, a return of around two times the money invested. Buyers of the shares included Polish and foreign financial investors.
In 1995 Enterprise Investors invested $13 million to lead a consortium, including CSFB, that privatised Grupa Kety by acquiring a 40 per cent stake from the Polish State Treasury. Enterprise Investors held its 17.5 per cent interest in the company through the Polish-American Enterprise Fund and Polish Private Equity Fund I and II. Kety was listed on the Warsaw stock exchange the following year. The government initially retained a stake in the company but this was later floated as well.
The Kety shares sold by Enterprise Investors and CSFB raised $11.2 each, substantially higher than offers received in 2000 to 2001 when Enterprise Investors was looking at a trade sale. “We decided to give up on a trade sale because the depression in the world economy hit the potential acquirers,” said Michal Rusiecki, who led the investment. The deal was worth a total of $28.5 million, making it the largest secondary trade in the history of the Warsaw stock exchange and first private equity exit through a secondary trade.
Enterprise Investors believes the deal shows that the Polish stock exchange has real liquidity for the right companies and the right sellers. Rusiecki said: “There has been a lot of discussion about the public market here: will it survive and will it ever become a place for raising capital? This deal has given us a lot of hope.” The firm, which has sold several previous investments through the market, hopes to be able to list other companies on the exchange in the future.
The firm attributes the success of the Kety deal to its restructuring, modernisation and the application of the principles of transparency and responsible corporate governance. The company also made two significant acquisitions at a time when foreign competitors were trying to enter the market.