Enterprise reaps 10x on Magellan

Enterprise Investors has further reduced its stake in Polish healthcare financial institution Magellan via a secondary share sale on the Warsaw Stock Exchange. The deal sees Enterprise sell 33.79% of its shares, or 2,211,250 shares, bringing its share in the company down to 33.79%. The shares were sold at PLN 52 each, a sizable increase on the PLN 42 per share achieved at the 2007 IPO and near the stock's 52-week high of PLN 54.

The Magellan deal marks a partial exit for Enterprise's Polish Enterprise Fund IV.

Previous funding
The firm initially backed Magellan 10 years ago when it participated in an $8m capital increase. It went on to wholly acquire the business when it bought out the company's founder.

Enterprise partially exited Magellan in a Warsaw flotation in October 2007. That transaction yielded gross proceeds of $13.5m for the fund, representing a 10x multiple of the original investment cost and 67% IRR in US dollars, according to unquote" data. Magellan also raised almost $7m in the float to finance the growth of its loan portfolio. 1,300,000 shares were offered at a price of PLN 42 per share, and the company debuted at a 7% increase over the offer price. The IPO was three times oversubscribed in the institutional investors' tranche. Magellan's market capitalisation as of the exit date was €76m. The IPO represented 20% of Magellan's capital; the management retained 4% and Enterprise retained the remaining 76%.

unquote" was advised on returns figures by LPs in Enterprise's funds; Enterprise themselves declined to comment.

Company
Founded in 1999, Lódz-based Magellan is a non-banking financial institution specialised in servicing the healthcare sector. It buys the outstanding debt of public healthcare units from primary creditors at a discount and then restructures and collects the debt for a profit. Hospitals and their suppliers constitute the customer base of the company. The solutions offered include financing of receivables, refinancing of liabilities, loans, guarantees, factoring, instalment schemes, lease and non-standard projects.

At the time of the IPO, Magellan had a core team of 30 employees; today it employs more than 100. The company's net profit reached approximately $2.3m in mid-2007; it stood at PLN 33.3m ($10.6m) for 2012. The company's turnover was PLN 24m (€6.5m) in 2006 and was PLN 105.6m ($33.6m) in 2012.

People
Dariusz Pronczuk, managing partner at Enterprise Investors, is responsible for the investment. Krzysztof Kawalec is chairman of the management board.

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