Women in PE: Abris Capital Partners' Nachyla on newly launched fundraise and portfolio priorities amid geopolitical challenges

The Poland-headquartered sponsor launched a fundraise for its new Abris Capital Fund IV several weeks ago, partner Monika Nachyla said. The first closing of the new fund, a “sister fund” of a “very similar” size to the EUR 500m, 2016-vintage CEE Mid-Market Fund III, is expected within six to 10 months, she said.  

Abris Capital does not have a specified closing date planned, she said. Instead, it uses a "rolling close" method, where – after the initial close - each new investor onboarded constitutes a new close. The new Fund IV will have the same strategy, aspirations, and ambitions as the last one, she said. 

After the first few weeks of fundraising, Nachyla has already seen that the investment climate is more challenging versus the process a few years ago. The biggest challenge is convincing cautious investors that – in spite of the war in Ukraine – the Central and Eastern Europe (CEE) region is still a safe place to invest in and shows great growth potential. 

"I'm not trying to convince the LPs that the war has no impact whatsoever on our country because that's not true,” Nachyla said. “But I want to convince them that the millions of people who have moved to Poland recently are a great opportunity for our economy. Billions of euros move through Poland further East, and that is an incredible chance for our economy, small and medium businesses, and banking system.” 

Meanwhile, the “great reconstruction of Ukraine” has been launched, with greater value to be found than in the whole reconstruction program after World War II, she said. “It provides a great opportunity for Polish companies,” Nachyla added. 

Abris Capital invests EUR 30m-EUR 70m in equity per company. The GP sees its role as being to prepare its investments to become attractive targets for global players. This is why, when looking at sectors, Abris is active not just in areas that are strong, specifically in the CEE region (such as specialty manufacturing), but also ones that represent global trends. 

These include logistics and services for e-commerce (with Polish e-commerce logistics platform Alsendo and its Apaczka brand), technology, recycling and the circular economy (such as Romania-based Green Group), and healthcare (including Poland-based healthcare services provider Scanmed, among other players). 

Consolidation efforts
In addition to its fundraising goals, the GP is focusing on building the value of the nine portfolio companies that it holds in its third fund through consolidation, among other methods. 

Alsendo, which Abris acquired in 2020, is embarking on a regional consolidation plan. Its most recent addition is Romania-based logistic platform Ecolet, as reported in April 2023. Similarly, in healthcare, Abris is making acquisitions for Scanmed, which in November 2022 acquired cancer care company Ars Medical.  

Abris is also consolidating the waste management sector around Romania's Green Group (held in its EUR 450m, 2013 vintage Fund II), which made six bolt-ons last year alone, she said. In April 2023, it acquired Zalvaris UAB, a Lithuanian waste management company, as reported. GreenGroup is active in the Baltic countries and Slovakia, but does not intend to stop there, Nachyla said, adding that it also looks at Polish targets. As reported, GreenGroup has a EUR 200m investment plan for the region. Nachyla declined to disclose how much of this amount has already been allocated.  

While Nachyla declined to discuss potential exits on the horizon, she addressed reports about a tissue and toilet paper producer Velvet Care and its sale process by saying the company is “ready” to be sold. The company has a Likely to Exit (LTE)* score of 75, according to Mergermarket’s predictive algorithm, with Mergermarket’s companies for sale intelligence and the holding period being the most significant contributors to the score.

Abris is also in talks over selling the remaining part of Polish fish processing group GRAAL, namely the business focused on smoked, fresh and frozen salmon sold under the Koral brand. In February this year, Theo Müller-backed fish producer Lisner acquired GRAAL subsidiaries that produced canned fish, ready meals, and marinades, as reported. "We hope we will be able to share some news soon," Nachyla said, referring to the remaining part of GRAAL. 

The price of ESG
As a BCorp-certified organisation, environmental, social, and corporate governance (ESG) is part of Abris’ business model. The GP received the globally recognised certification in May 2023, making Abris the first and the only BCorp in the region to date and one of 70 other PE managers in the world, Nachyla said. 

The firm has a dedicated team responsible solely for implementing ESG procedures and standards within its portfolio companies. One of Abris Capital's primary ESG goals is to make its portfolio carbon-neutral by 2025, she said. 

"ESG is not just a tick-the-box element," Nachyla said. One of the benefits of implementing an ESG strategy is “the penalty you will avoid in the context of the local or EU regulations,” she noted.  

There is also a potential reward when it comes to valuations, she said. “When we invite global investors to the table, and they see a fully ESG-compliant company, they are willing to pay 1x EBITDA more. But five years from now, if a company is not ESG-compliant, investors will not even consider making a deal,” Nachyla said, adding that she does not understand why so many players are not taking ESG seriously. “Implementation doesn’t happen overnight. Sure, you can prepare a report or an Excel file. Still, with evolving regulations, you will soon find yourself in a tough position if you don’t have the relevant data, tools, and knowledge.” 

Abris has turned down deals in the past due to ESG concerns. "There was a case when we decided not to invest in a target because adjusting it ESG-wise would be too expensive overall,” she said, noting that the GP would have had to build the potential target’s production facilities from the ground up again. “They didn't meet any safety standards, they were using old equipment, they had a disastrous impact on the environment,” she added. “The product they delivered was good, and they had good financial results, but their processes didn't meet any ESG standards."  

Personal path
In addition to her focus on ESG, Nachyla's role within Abris also involves other responsibilities, such as investor relations. "Right now, as we are fundraising, that means frequent travel and discussing with potential LPs," she said. Another aspect of Nachyla's role is communication, PR, and marketing, she said. Finally, the partner works directly with portfolio companies, sits on supervisory boards, and works closely with the leadership teams. 

When Nachyla was still a student, she did not know that the private equity sector existed, she recalled. "I started my career in audit, and then naturally, I moved to finance to become the CFO of a large pharma company,” she said. Seeking a fresh start a few years later in an area that would give her exposure to different sectors and a general function overlooking the business as a whole, a headhunter friend of hers mentioned private equity. She subsequently joined fellow Poland-based GP Innova Capital. 

Access to internships, as well as the portrayal of the industry via shows on online streaming platforms (be it positive or negative), have made more people aware of the PE and VC world. But Nachyla did not know what to expect when she entered the industry 23 years ago. "Back then, even though I didn't know the sector, I knew I could provide financial expertise the institution needed," Nachyla said, adding that she is driven by three values in her life: curiosity, courage, and contribution. "Curiosity, for me, is trying something new all the time; courage is the ability to face my fears and still do it; and contribution is about having a positive impact. That's my motto." 

When working on diversity and inclusion (D&I) initiatives, Abris Capital first focuses on changing the mindset within their portfolio companies, referring to “creating D&I readiness in decision-making groups”. This includes working with portfolio companies' boards and organising training sessions. 

“It's a crucial step for us because, before we can change anything, we want the leaders to believe in the necessity of the cultural change and how diversity can contribute to their business,” Nachyla said. 

This phase is also the most difficult, according to Nachyla. Only after the cultural and mental change happens is the organisation ready to take the next step and accept the quotas, she said. Abris aims to bring any “underrepresented gender” to 30% in the governing bodies of all its portfolio companies during its investment period. The underrepresented gender doesn't have to be women, she said, as there are sectors, such as aesthetic medicine, dominated by female leaders. Every company is at a different stage, with some being more advanced in this area than others, she added. 

One lesson Nachyla has learned from decades of working in the industry is that it is essential to be authentic and persistent when it comes to the ideas one believes in. "I've had a few cases where I gave up on some important ideas for the sake of consensus and compromise,” she said. “I always regretted it. And I always thought that we wouldn't have to go through a painful lesson if I didn't give in. Today, I'm not explaining myself, I do not apologise, and I stand by what I believe in.” 

by Joanna Socha in Warsaw 

*Mergermarket's LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.

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