Magellan (Poland) - Oct 2007

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01 October 2007

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Polish Enterprise Fund IV, the private equity fund managed by Enterprise Investors, has partially exited Magellan in an IPO on the Warsaw Stock Exchange. The transaction, which yielded gross proceeds of $13.5m for the fund, represented a 10x multiple of the original investment cost and 67% IRR in US dollars. Magellan, a non-banking financial institution specialised in servicing the healthcare sector, also raised almost $7m 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 E76m. The IPO represents 20% of Magellan’s capital; the management owns 4% and Enterprise Investors retains the remaining 76%.

Previous funding

The fund first invested $8m in the company in 2003 through a capital increase, and eventually acquired the company wholly by buying out the remaining shares from the company’s founder.

Company

Active since 1999, Magellan 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. The company is based in Lódz, Central Europe and has a core team of 30 employees. The company’s financial products portfolio was worth $52m as of mid-2007, while its net profit reached approximately $2.3m. The company’s turnover was PLN 24m (cE6.5m) in 2006.

People

Dariusz Pronczuk, managing partner at Enterprise Investors, is responsible for the investment.

Advisers

Equity - UniCredit Group, Marek Cwir (Financial Due Diligence)