Cinven, Permira, Mid Europa Partners win deal to buy Poland’s Allegro for $3.253bn

Cinven, Permira, Mid Europa Partners win deal to buy Poland’s Allegro for $3.253bn
By Nicholas Watson in Prague October 14, 2016

A buyout group of Cinven, Permira and Mid Europa Partners were confirmed on October 14 as the winners of a bidding contest to acquire the Polish online auction site Allegro from South African owner Naspers, in a deal which came at more than $1bn above expectations of around $2.2bn, making it this year’s biggest private equity deal in Central and Eastern Europe.

The group saw off competition from Advent International in tandem with investment fund Hellman & Friedman, Apax with CPP Investment Board, and CVC Capital Partners with General Atlantic.

Allegro was highly regarded as an acquisition opportunity given its double-digit growth, already high market share and profitability, and relatively high (at least in emerging market terms) market penetration. “Operationally, Naspers’ Allegro business continues to compare favourably with its larger US peer (eBay), with underlying growth accelerating into low double digits in [2016],” wrote analysts Credit Suisse ahead of the deal.

As such, observers were not too surprised that the deal came in above the $2.2bn valuation that Naspers had placed on it in September, though the final price of $3.253bn was considerably higher. Naspers acquired Allegro in 2008 for $1.485bn. Naspers’ shares closed the day up 5% in Johannesburg trading. 

If completed, the deal will be one of the five largest acquisitions of a Polish asset ever, according to data compiled by Bloomberg, and the largest private equity deal this year in the CEE region. According to industry observers, although still at relatively modest levels, private equity investments in CEE look to be back to levels last seen in 2009. A report issued in August by Invest Europe (the new name for the European Venture Capital Association) and law firm Gide Loyrette Nouel said that buyout investments increased by 36% to €1.3bn in 2015, representing 78% of all investments. Poland accounted for 54% of that total, boosted by CVC’s acquisition of PKP Energetkya.

That appears to have continued into 2016, with Poland the most active region in terms of investments in the first quarter, accounting for eight deals, or 35% of all deals worth a total of $425mn in the region. 

Permira said this is its first investment in Poland and was attracted by the high growth in the Polish e-commerce market as well as the fact it is still in an early stage in terms of e-commerce penetration, so strong growth opportunities lie ahead. Poland's e-commerce market is expected to grow by 15% in 2016 to PLN36bn and to PLN63bn by 2020, according to Sociomantic Labs.

Regarding Allegro, the UK-based private equity firm noted that it is Poland’s number-one internet brand with more than 20mn registered users and the most popular e-commerce destination with more than a 40% share of total e-commerce transactions.

“The Permira Funds have been backing internet leaders for many years. In Allegro we have found a real gem which is the pre-eminent consumer and merchant internet brand in Poland. The business has a fantastic underlying technology platform and we look forward to backing the management team to develop it further. We believe Allegro is ideally positioned to capture the next wave of growth in online and mobile commerce,” said Richard Sanders, a partner at Permira.

Advisors to Cinven, Permira and Mid Europa on the transaction included: Goldman Sachs International (lead financial advisor), Macquarie (financial), Clifford Chance (legal), McKinsey (commercial) and EY (accounting and tax), while the seller was advised by Morgan Stanley (financial advisor), Allen & Overy (legal) and Deloitte (accounting and tax).

News

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss