In Q1 2017, Private Equity Managers S.A. Group (PEM Group) recorded a 13% increase in revenue from the fixed management fee (YoY), earning PLN 4.5 million. The funds under management remain active as buyers and sellers.
In Q1 2017, the funds managed by the Group focused on cooperation with portfolio companies and searching for new investment targets. At the end of March 2017, Net Assets Under Management (NAV) totalled PLN 2.105 bn vs. PLN 2.023 bn at the end of 2016, representing a 4% increase. The change in NAV is mostly due to a change in the valuations of the funds’ portfolio companies and the new issuances of investment certificates.
Correlated with assets under management, the fixed fee revenue totalled PLN 11.3 m in Q1 (growing by 13.6% YoY and 4.8% QoQ). Additional variable fee revenue was generated by MCI.CreditVentures. The management fee income in Q1 2017 totalled PLN 11.6 m vs. PLN 10.5 m the year before, meaning an annual increase by more than 10%. The consolidated net profit was PLN 4.5 m (vs. PLN 1.6 m in the previous year).
Review of the portfolio of companies
For the PEM-managed funds, the first three months of 2017 were marked by an active support for value-creation activities of portfolio companies. The highlights of Q1 include the acquisition by Gett of Juno, its market competitor based in NYC, for USD 200 m.
The launch of international money transfer services via SMS was very important for Azimo, as it will help the company build its competitive advantage in the future.
Indeks, a company listed at the Istanbul Stock Exchange, is also reporting record-breaking performance. Further to that, projections shown by Garanti Bank predict a target share price of TL 13.2. At the time of the presentation of the report, the shares were worth TL 10.38.
For the first time in Poland, drivers can enjoy reduced insurance premiums thanks to safe driving. This solution is possible owing to the cooperation between NaviExpert and Link4, an insurer.
Moreover, a PMI (post-merger integration) project is carried out for eCard and Dotpay, which should ultimately double the EBITDA of the merged entity at the end of 2017.
Frisco.pl, an online supermarket, remains on a path of strong growth. Over the next months, it will focus on the further penetration of the Warsaw market. This plan entails a decision to build a new, larger warehouse.
Objectives for 2017
The priorities for the coming months depend on the Fund under review. MCI.EuroVentures, after the successful divestment from WP, will continue to work towards new exits, but they also intend to look for new projects. MCI.TechVentures, with its young portfolio, will focus on working with its portfolio companies. In Q1, CreditVentures closed its first investment in Spearhead, generating a rate of return in the range of 15 percent, and it launched an active search for new investment projects in the mezzanine and junior debt financing areas.
– “One of our key objectives for this year is to increase the level of assets under management as the basis for our fixed fee. MCI.CreditVentures is an example of a very promising fund operating in the debt financing market, which is a niche, yet it shows a great potential. We believe that the fund will maintain its current growth rate and will be one of the best performing tools in the execution of our plan”, said Tomasz Czechowicz, President of the Management Board at Private Equity Managers S.A.
PEM is working towards the opening of new funds in the startup/Venture Capital area. It will build on the experience acquired in the management of Helix Ventures Partners and Internet Ventures funds, hoping to cooperate with external finance and industry partners.
PEM’s dividend strategy envisages a regular profit sharing with its shareholders. The Company’s Management Board intends to make a proposal to its General Meeting, offering PLN 10 m as dividend from its 2016 profit.