We are proud to welcome our sponsor Polish MCI Group, a renowned player among PE/VC funds in the region.
MCI Management has recently executed three important investments, in Blacksquare Investments Limited (KupiVIP Holding), leading fashion e-commerce in Russia (around EUR12 million); 21Diamonds, fast-growing German e-jewelry and mojebiuro.pl, innovative online accounting company (1,25 million Euro). It has also made a spectacular exit from Mall.cz, Eastern European e-commerce leader making close to 40 million Euro. Add to that the value of exit from Nexto.pl (e-books and digital press) and the dividend from ABC Data, MCI earned a record breaking value of disinvestments in the amount of over 42,48 million Euro.
MCI has a track record in backing companies with a significant growth potential, at growth capital stage in particular. Its focus is in supporting local champions reach European and then global level. Invia and ABC Data are good examples. With fund’s support the companies are successfully transforming from national champions into Emerging Europe regional champions. Invia is currently storming the Russian market where it invested in the Russian company Travelata, a startup aspiring to become the leader in distributing online travel packages in Russia. Then there is ABC Data, which entered the Hungarian market this year and plans to expand into three more CEE countries the year after.
So far, the MCI group has executed a total of over 50 investment projects and exited 20. Currently the fund is managing a portfolio of assets worth almost 197 million Euro, the highest in the company’s history. During the three quarters of 2012, MCI recorded nearly 10 million Euro net profits. “Most positive impact on the result comes from the activities of MCI.TechVentures fund, which invests in the most interesting market segment of highly potential companies in online, e-commerce and global digitalization,” says Tomasz Czechowicz, Managing Partner of MCI Management.
MCI.TechVentures is the the best performing fund of the MCI Group. With successful investment exits, dynamically growing values of portfolio companies it became the group’s largest fund in terms of net assets – 68 million Euro. For its investors, the fund generates returns beyond any market benchmarks. Since the first issue of certificates, the returns for investors were threefold. According to rankings by leading financial portals in Poland, the certificates of MCI TechVentures are the best moneymaking investment products in the group of closed-end investment funds in recent years. Its three-year internal rate of return was close to 170%.
MCI is an active fund. Its engagement is not only providing capital. Members of the managing team also take seats in supervisory boards of portfolio companies maintaining investor supervision and providing knowledge support to the managing boards. It supports development of the companies by sharing comprehensive know-how on developing growth strategies, financial management, fundraising, mergers and acquisitions or planning investment projects. MCI investments also improve and strengthen the image of these companies. With the fund’s investment, the entrepreneur does not only receive the financing necessary to grow the business, but also added value in the form of an experienced partner who is just as committed as other owners of the company to effectively build up its market potential.
Target: eastern markets
Since first sailing out on international waters in the year 2004, MCI focused mainly on Central Eastern Europe. “The population of Central and Eastern Europe is 182 million people, which is a huge part of Europe and the world. What is more noteworthy is that the gross domestic product of this region is higher than in Russia. In spite of that, many people seem to have neglected this part of Europe for a long time, while the region has many dynamically growing economies. Usually 2-3% ahead of Western Europe. For the last 5-10 years, this growth was 5-10% of GDP, depending on the country,” Czechowicz arguments his decision. MCI Management has been present in CEE for eight years and total IRR was 40% so far, with limited competition from other PE/VCs.
The fund is constantly growing. Poland, Czech Republic, Bulgaria and Hungary became too small and MCI began its expansion to all of Emerging Europe. In addition to central, southern and eastern European countries it also includes Russia, some former Soviet Union states and Turkey. That is nearly 500 million people. Joining the group of investors in KupiVIP Holding and actively supporting Invia’s launch in Russia through the local startup Travelata, MCI opens the door to the CIS market and mainly Russia. On the other hand, the investment in the prospective 21Diamonds company that aspires to be the global leader in selling jewelry online (already selling on lucrative markets in Brazil and India) shows that the company is also targeting the DACH region. In the first half of 2013, MCI plans to invest in Turkey and other CIS countries.
The strength of leadership
Much of the credit for MCI’s success goes to the energetic team leader, Tomasz Czechowicz, who since 1999, the beginning of the company’s existence, has worked on bringing the company to its current position. The cooperation with Intel Capital brought the Mall.cz investment. Czechowicz himself, often jetting between European capitals, is recognized both at home and abroad. He is respected in the industry, sometimes even criticized for his ruthlessness in doing business or being overly attached to his own opinion.
E-commerce with a future
According to analysts, selling online is the next best thing. That is why the e-commerce sector is the main focus of MCI Management. MCI sees the benefits that come from moving traditional business activities to the Internet. That is why the Group invests in many companies from this segment. In addition to KupiVip.ru and 21Diamonds there is also a grocery delivery service Frisco.pl. After the company took over customer support of its two competitors, Frisco is becoming the leader in the FMCG industry in Poland.
More prospective investments in this segment include previously mentioned Invia.cz, the strongest player on the e-travel market in Central Eastern Europe and Morele.net, leading Polish e-commerce in the sector of IT/home appliances and electronics distribution. “A revolution in the economy is happening before our very eyes. Especially in trade which is moving online more and more bravely. In a few years, the e-commerce market will be 10 times bigger than today, with the growing popularity of tablets that make online shopping easier, more pleasant and accessible to anyone,” adds Czechowicz. In Poland, which is the fastest-growing economy in the CEE region, e-commerce is already the fastest growing segment of the economy. Similar trends are visible in neighboring countries, the Czech Republic, Ukraine and Lithuania.
Following the strategy it adopted, MCI invests in companies at early stages of development, in subsequent rounds of financing their growth. The group focuses on the e-commerce sector, but it is also present in mobile services, wireless solutions and digital entertainment. In the latter category, Geewa Company, publisher and developer of online games, is one worth mentioning. It has already outpaced its Central Eastern European competitors and with support of MCI.TechVentures it intends to go global.
Despite the global economy succumbing to lethargy, the online industry is still in good shape. The demand for new technologies is still increasing, because people increasingly appreciate their benefits in both their private and professional lives. It is here that MCI sees its opportunity and continues to invest more in such companies.
The fund aims to own at least 10 companies with an exit potential of over 25 million Euro each. It is already pretty close – according to Czechowicz, the current portfolio of MCI includes seven companies that meet this criterion. “We begin to see new prospective markets, we benefit from growing markets like Russia and Germany. In the future we plan to continue the geographic diversification of our portfolio. We are closely looking at Turkey and CIS countries,” asserts Czechowicz. In the next two years, his fund will double the scale of its investments and spend up to 120 million Euro by the end of the year 2014, most of which will already be invested next year.
