Women in PE: Resource Partners’ Bobrowska outlines sponsor’s M&A and diversity ambitions

Resource Eastern European Partners III SCA SICAV-RAIF has a hard-cap of EUR 200m, Bobrowska said, declining to disclose commitments at first close. It is looking to raise the rest of the fund by mid-2023.

RP’s minimum ticket in the third fund stands at EUR 5m, but its sweet spot is EUR 15m-25m, Bobrowska said. The fund can deploy larger tickets with co-investments, she said. It invests in Central and Eastern European countries that are part of the EU.

Resource Partners focuses on investments in growing small and medium enterprises (SMEs), focusing on consumer products and services operating in local and regional niches that have the potential to be scaled up on the European market. The most important aspect in target selection is the ability to see the company through to the next level of its growth stage, Bobrowska explained.

The fund has made one investment thus far, buying a stake in Lithuania-headquartered Deeper, a producer of castable sonars for fishing, plus accessories such as night fishing covers and flexible arm mounts. “It’s a niche, but a sizable one,” Bobrowska commented. “Deeper is already a global leader in this field, but its market penetration is still not so significant, and we want to change that. The business has a strong potential because its products are affordable for most people engaged in angling”.

Investments in niche companies are in line with RP’s strategy, as these players are often resistant to market turbulence, she said. Consumers generally have little chance to substitute these products, she said, given that they are often leaders in their specific fields.

The sponsor’s third vehicle will maintain RP’s focus on consumer products and services, but the firm will continue to adjust to the current trends in the area. Private label food production, for example, was on the sponsor’s radar about ten years ago, Bobrowska said. “Our goal was to transform the local private label producers into European leaders - which required export development, but also increasing capacity to accommodate these additional export sales,” she explained.

Investments from its second fund were focused on discretionary spending, and both funds made multiple investments in companies focused on healthy lifestyle, where it saw momentum over the past few years, she said. These included Polish breakfast cereal company Melvit in its debut fund, as well as Romanian fitness club chain World Class Romania and a bicycle distributor 7Anna in its second fund.

For its third fund, RP expects to adjust to the newest sector trends, especially around environmental and social responsibility, as well as segments immune to the current macroeconomic and geopolitical situation, she said.

Upcoming exits
The portfolio of RP’s second fund is beginning to mature, with online wall décor retailer Artgeist and skincare products maker Torf Corporation (Tołpa), both from Poland, under its ownership for five and six years respectively.

These companies are natural candidates for exit as they have been in Fund II’s portfolio for the longest, Bobrowska said. In spite of this, the firm does not feel any pressure to make any “sudden moves”, given that the fund’s investment period has just come to an end. “Instead, we are monitoring the market, and if the potential buyers’ sentiment will be positive, we will be launching exit processes. Potential exits from at least one of our investments could happen this year,” she said.

RP’s average investment period is three to five years, although the right exit time varies from business to business, depending on the specific company’s growth strategy, Bobrowska said.

Cereal producer Melvit was in RP’s portfolio from 2011 to 2020 as it made a greenfield, PLN 100m-plus [ca. EUR 21m] investment in building a new plant, a process that took a few years, she said.

On the other hand, its two most recent exits took place approximately two years into its holding period. Polish diet catering provider Maczfit was acquired by convenience stores chain Zabka Polska in March 2021 while pet snacks producer Maced was sold in February 2022 to Assisi Pet Care, a large UK-based group that was consolidating the pet products market and one of Maced’s clients.

“Again, [Maced] was an investment in line with the trend that pets nowadays become our life companions. We pamper them and we care about their health the same way we care for ours,” she said. “Maced did a lot of organic work, on top of the acquisition of the second largest player on the Polish market [Atlantic Products] when it comes to the production processes and product quality.” RP upgraded the company’s positioning from a producer of basic pet snacks to a provider of premium products, which meant it showed up on the radar of many strategics, she added

Major challenges
RP’s recent activity has taken place against a challenging backdrop, with the pandemic acting as the first “Black Swan” in the market, prompting many founders to consider risk diversification, Bobrowska said. “Before COVID-19, the founders were less prone to sharing risk through partial stake sales. The pandemic made them reconsider this possibility, which was reflected in RP’s high level of M&A activity in 2021,” she recalled.

That year, the sponsor invested in hybrid nail polish producer Nesperta, playground manufacturer Buglo, as well as Deeper.

The first half of 2022, on the other hand, was a challenging time for the PE market in general, Bobrowska noted, pointing to the Russian invasion of Ukraine. “In terms of transactions, 2Q and 3Q 2022 was a wait-and-see moment. We could sense the uncertainty of the international investors regarding the profitability of businesses due to the energy and commodities market price increases, as well as regarding the geopolitical situation, where they looked at CEE as a market with increased risk element.”

Although 2Q and 3Q 2022 saw little activity from international strategic players in the region, acquisitions and exits stabilised in 4Q, she said.

The geopolitical situation was also a test for the Warsaw-based fund’s portfolio companies, particularly when it came to the pricing of raw materials. “Despite the difficult circumstances, the executives handled the challenges well and – what’s more important - quickly,” Bobrowska said. Some of the steps taken by its portfolio companies executives included raising prices for the end customers, thanks to which they managed to grow both in revenues and EBITDA in 2022, with some in excess of 20% per annum.

RP coaches the boards it works with to be agile and to adjust rapidly to market changes, she added. RP also works to improve the functioning of certain business areas that smaller companies might neglect at earlier stages, but become key to further growth later, such as finances.

One of Bobrowska’s favorite portfolio companies is a playground manufacturer Buglo. While it is the biggest player in its niche sector on the Polish market, it company exports 80% of its output to other European countries. “Buglo allows to refresh the playground to address newest trends in terms of ecology, building inclusive playgrounds that are friendly for children with disabilities as well as structures that are more ambitious and challenging for children,” she said, highlighting tall structures such as rope pyramids that are more than nine meters high.

“Last year, Buglo released its first inclusive swing, which is innovative, because a common solution previously offered by other manufacturers were separate swings for children with and without disabilities. This one can be safely used by both,” Bobrowska said. Other products released by Buglo include playgrounds made from recycled materials. Its clients include distributors that take part in public tenders aimed at revitalisation of parks or playgrounds.

Diversity push
Now a managing partner, Bobrowska has been with Resource Partners since 2009. Having co-founded the firm, she started as an investment director and over the years climbed up the organisational ladder to reach a top executive position. At present, Bobrowska is one of four investment committee members and is therefore responsible for investment decisions. Last year, she was also appointed as president of the Polish Private Capital and Venture Capital Association (PSIK).

Bobrowska is also a co-founder of a Polish committee of Level20, a European initiative which aims to achieve 20% participation of women in senior positions in the PE and VC space. At present, less than 10% of senior leaders in PE in Europe are women, Bobrowska said, pointing to the Level20 research. At RP the figure is already at 25%, she added.

Even though the diversity factor is important for RP, the absence of women on the managing board at a target company is not a dealbreaker for the sponsor. However, in such cases, RP runs initiatives to increase the number of women in senior management, either through internal promotions or targeted recruitment activities, she said.

“I am generally critical of one-gender teams, no matter whether these are all-female or all-male. I see a great value in the diversity of thought, views and experiences,” she said. Now that Bobrowska is a managing partner, she strives to increase diversity within RP’s team. The firm recruited three women and two men last year, she said.

“The higher I am on the organisational levels, the more I see that I’m the only woman in the room,” she said. “And I’m commenting on the whole ecosystem, including the advisory, law, and business worlds. That said, I never looked at my gender as something that limits my opportunities. Maybe because I enjoyed a career in this industry helping the companies grow, I never paid much attention to the gender differences in the room.”

Bobrowska highlighted three major barriers for women in this sector. The first one, she said, pointing to the Level20 research, stems from the fact that, at an early career stage, women tend to reject the PE career path as one that is available to them. The second barrier comes down to balancing work and personal life, and research shows that this is more challenging for women than men, no matter the sector, she added.

“The third barrier is cognitive bias, which makes ‘like us’, for many people, sound better,” she said. “This sector, which is dominated by men, attracts people that may seem as [though] they are more similar, more known, and therefore better prepared. This is also something we actively work to address at Level20. We communicate not only to women, but also to men, that diversity pays off.”

She also stressed the need for mentoring. “I think the women who made it in this industry should find time to mentor and sponsor younger colleagues. As part of Level20, we organise mentoring programs, where women can talk to someone who has experience balancing the work and personal life areas and share their experiences.”

Reflecting on her own career, Bobrowska added that she would not like to double down on stereotypes that only women who are really tough can make it in this industry. “Personally, I think it’s not like that, and I’m not like that myself. I am a happy mother of two sons. I never missed school or kindergarten performances or other important events in their lives. I’m also a guardian of two dogs (and a hamster), with other passions outside of work,” she said.

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• Topics
• GPs
• CEE
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• Poland
• Women in Private Equity