Borrow to buy

According to PricewaterhouseCoopers, Poland is the second-largest market for mergers and acquisitions (M&A) in the CEE region. In 2005 the value of M&A transactions in Poland was $8 (zł.23.14) billion and is predicted to reach $20 (zł.57.84) billion in 2006.

"Equity funds have so far been focused on gathering their resources, so their investments have been limited," said Krystyna Gottman-Narożna, vice president of corporate finance at Invest Kredit Bank (IK). In 2006 the value of equity funds reached EUR 2 (zł.7.62) billion, and about 80 percent of these funds could be spent on M&A transactions. To encourage investors to take part in M&A, IK has decided to offer a leveraged buyout (LBO) option, which offers companies bank loans for M&A transactions.

In 2007 IK plans to allow some $60 (zł.173.49) million to be released for four major transactions or several more medium-sized ones. "For every euro invested by a company, the bank can add another two or three euro," said Gottman-Narożna.

Hans Köeppen, the general director of IK Bank in Poland, said LBO has been offered in Poland for three years, but less than 10 such transactions have been conducted so far. "Nowadays, Poland's companies are better managed, and that is why we are convinced that it is the right time to offer LBO to Polish customers," he added.