With Bancroft, JPMP Shows Appetite For Central Europe –

Perhaps as a sign that Central Europe is gaining acceptability among the mainstream of private equity investors, New York-based JPMorgan Partners, along with London-based Bancroft Private Equity LLP, recently signed an agreement to acquire Nowaco Central Europe, a player in the food industry that’s based in Kralupy, Czech Republic. The total enterprise value for the transaction, which is expected to close sometime this summer, is ?90 million (about $113 million).

Founded in 1990, Nowaco Central Europe distributes chilled and frozen foods such as fish, vegetables and local specialty products to the hotel, restaurant, catering and retail industries in the Czech Republic, Slovakia and Hungary. It also produces chilled and frozen foods under the NOWACO brand, and ice-creams under the PRIMA brand, which it then distributes to the aforementioned markets.

Though some private equity firms have already moved into Central and Eastern Europe, direct investing in the region is still deemed too risky by some of Europe’s largest and most successful private equity firms. Conversely, the firms investing there today are betting on the frontrunner’s position-that they will be in a more favorable, well connected, position once the market opens up to the mainstream.

“As consumer habits and living standards of Central Europe continue to converge with those of the [European Union], we believe Nowaco [Central Europe] is well positioned to continue growing its business robustly,” said Fred Martin, a managing partner at Bancroft.

JPMorgan Partners could not be reached for this article by press time.

The selling party is Nowaco Group S/A, a Denmark-based food and services provider primarily to the Central and Eastern European markets. The parent company will retain its international trading company, which has offices in Shanghai, China; So Paulo, Brazil; and Mar del Plata, Argentina, among others. Last year, Nowaco Group’s profit after tax and minority interests amounted to DKK 47.5 million, a 12% increase compared to 2003, according to an earnings report released by the company.

Bancroft is currently investing out of Bancroft II LP, which held its first closing in November 2002. Fund II is focused on private equity investments in Central and Eastern Europe, the Baltic countries, the Balkans and Turkey. JPMP is listed as one of the vehicle’s limited partners, as well as AlpInvest Partners, International Finance Corp. and Bank Austria Creditanstalt.

JPMP is currently investing from JPMorgan Partners Global Investors Fund, a vintage-2001 vehicle that closed with $6.3 billion.

Venturing into emerging markets is not the only recent change for JPMP. In March, the firm announced it would split from its corporate parent J.P. Morgan Chase. The spinout will result in a pair of independent firms-one focused on venture capital and one focused on leveraged buyouts and growth equity investments. The venture group looking to raise about $400 million for its first independent fund, while the buyouts group seeking LP commitments to the tune of $4 billion, which it hopes to have by early next year.