Jet Investment opens Polish office, eyes future DACH expansion

The launching of a Polish office was part of a long-term strategic process by the industrials-focused sponsor, Chłopek said, with Jet's four partners taking the decision to establish the new site in mid-2022. The firm aims to build a team responsible for sourcing and executing investments for its newest flagship fund, Jet 3.

The firm is not disclosing the target of its latest fund, Chłopek said, but its capital commitments have exceeded EUR 130m and the fundraise is ongoing. "A significant part of the fund will be invested in Poland, with more than EUR 100m reserved for three to eight direct investments," he added. The sponsor's previous fund held a final close in 2018 on EUR 153m.

Chłopek joined Jet at the end of 2022 after a 20-year stint at Warsaw and New York-based sponsor Penton Partners. The firm plans to hire an associate and an investment director for its Polish team in 2023, with this expected to grow to a team of six to seven people by 2025.

"It's important to have an office in Poland as we want to have direct, active supervision of our portfolio companies, sourcing opportunities through analysis, due diligence, acquisition and monitoring, and closing," he said. The firm plans to make cornerstone deals in Poland, followed by add-ons in Germany and Austria, which will put the firm "in a unique position to build European industrial champions delivering products globally."

Although still at the outset of building its presence in Poland, Jet is aiming to make a start on its plans to expand to Germany in early 2024, once it has raised Jet 3. "Austria could be the next step, but we will concentrate on the Czech Republic, Slovakia and Poland for now," he said.

Continued growth

The Polish market should yield strong opportunities for Jet's strategy, given that Poland is the biggest country in the Central Europe (CE) region, and 42% of European industrial production is done in this region, said Chłopek. Poland is currently seeing strong economic growth, he added, with 38 million Polish citizens and a further 2 million Ukrainian refugees, for whom Poland has put money into support, education and healthcare, and who are supporting its growth. The economy is expected to continue to grow at a high rate, he said.

Alongside this growth, Jet sees opportunities arising from generational change. "The flow of potential investments is huge – in the next five years, more than 3,000 Polish family-owned medium-sized businesses are expected to be sold," Chłopek said. "We have a generation of founders, many of whom started successful business in the 1980s from a garage or a small factory, who are reaching retirement age without a succession plan."

Macroeconomic factors including rising inflation, leading to rising production costs and wages, are also making for a tough environment for businesses, he added. "This means that sellers are more flexible on terms and pricing, which creates opportunities for us and for our investors."

Jet Investment first invested in the Polish market via MSV's acquisition of Kuźnia Ostrów Wielkopolski in 2016. The firm currently has three portfolio companies with a presence in Poland: oil and fuel systems producer Rockfin, electricity co-generators producer Tedom Poland (part of Czech Republic-headquartered Tedom); and Eurodruk-Poznań, part of printing specialist EDS Group. It also has a portfolio of five industrial premises owned by its real estate fund, Jet Industrial Lease.

Inbound dealflow

Jet will deploy equity tickets of EUR 10m-EUR 50m for its Polish deals, placing it below the typical threshold of sponsors and strategic buyers typically active in the region, Chłopek said.

Jet invests in several industrials subsectors, including renewable energy equipment, rail, aerospace, automotive, industrial machinery, chemicals, industrial waste processing and recycling, technical textiles, composite materials, specialty alloys, building materials and ICT.

"I am convinced that returns we will make here will be attractive and appropriate to our investors," he said, adding that Jet typically gets two to three inbound potential investments every two weeks from Poland.

"We get a lot of inbound project flow and potential sellers know where to find us," he said, adding that the firm has eight attractive potential investments in its pipeline overall, five of which are from Poland. "For some of them, we have already sent NBOs, some of which have been evaluated positively, and we're expecting to move to the next stage in the coming weeks."

M&A advisers and lawyers with sale mandates are also a major source of dealflow for the firm, as well as family offices, he said. "We often hear from entrepreneurs who are ready to sell on their own without using advisers. We ideally work with intermediaries in those situations, but a local presence helps a lot in more informal processes."

[Editor's note: The article has been amended post publication to correctly identify Marek Chłopek as Managing Director of Jet Investment.]

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