EI to introduce investment fund; launch medical portal
Enterprise Investors (EI), Poland's biggest venture capital and private equity management firm, will introduce its largest investment fund next month as well as finalize its plans to launch a medical portal project, fund executives said last week.
The projects come at a time when EI is focusing on investing heavily in the information technology and healthcare sectors.
The new investment fund, the Polish Enterprise Fund IV, will incorporate $300 million in investments, with the first closing scheduled for September and the second and final closing slated some time before the end of the year, said Robert Manz, an EI partner responsible for the company's investment in internet projects.
Jacek Siwicki, an EI managing partner in charge of the company's strategy and operations in Central and Eastern Europe, said that roughly 20% of the new fund's investment would be placed in small, medium, and reasonably large IT firms. He declined to name specific companies. The fund will invest up to 25% outside Poland in all sectors, including possibly in the Czech Republic, Romania and Bulgaria, he said.
Venture capital firms such as EI invest money in risky start-ups that are in the early stages of developing their products and services. The capital allows the start-ups to develop services without having to borrow money at high interest rates before they generate any revenue.
"(The new fund) favorably reflects investor appetite toward Poland and the Central European region in particular and demonstrates a reversal of attitudes since the Russian crisis," said Neil Milne, managing director of the Copernicus Capital Management Fund, a venture capital fund competitor. Furthermore, he said the fund was a "favorable bellwether that investors are putting their hands in their pockets for Poland and Central Europe."
The Polish Enterprise Fund IV will invest 15-20% in the Polish healthcare sector during the next two to three years "thanks to the reforms in the healthcare industry," Siwicki said. Poland's healthcare system was overhauled in 1999 when a new law was passed obliging employees to pay a certain percentage of their gross salaries to finance public medical coverage. Prior to the law, the state provided free healthcare services, but the system was largely seen as inefficient, underfunded, substandard and corrupt.
"The (healthcare sector) has gone through a number of cycles while people have been digesting the reforms at the political level," Milne said. "There's a need for improved healthcare facilities ... and (investments in) the pharmaceutical companies." He added that as incomes in Poland increase, Poles will look to private healthcare centers for medical services instead of public facilities.
EI has previously invested a total of $26 million in companies in the Polish pharmaceutical sector, including in Polfa Kutno, Polska Grupa Farmaceutyczna and Pharmag.
In addition, EI announced earlier this month that it concluded its first investment in the healthcare market when its current Polish Enterprise Fund acquired 90% of Medycyna Rodzinna, a Warsaw-based private healthcare provider. Medycyna Rodzinna will use EI's $10 million investment to build up a national network of outpatient clinics and develop complementary medical businesses within a healthcare facility. EI said it plans to invest up to $50 million in the rapidly growing healthcare market during the next three to four years.
In September, EI also will sign a final agreement with Medical Data Management (MDM), a healthcare industry marketing and communications provider, to launch a medical portal, Manz said. The two companies signed a letter of intent with MDM for the joint online venture on Aug. 10. The start-up project will cost $2.25 million. MDM will contribute "its expertise, contacts, knowledge and database of registered users and medical professionals," he said.
Unlike other medical or health-related portals that focus on providing information to consumers, the project will be geared to medical professionals, Manz said. However, he declined to give details about the portal. He said that the project had nothing to do with any of EI's investment funds and that further details would be announced in September. When asked how the site would generate revenue, Manz again said details would be released later.
Since the establishment of EI's investment activities in 1990, the company has made a name for itself as the largest venture capital firm in Poland. The four funds managed by EI have invested more than $530 million in upward of 70 Polish companies in various economic sectors. The four current funds EI manages are the Polish-American Enterprise Fund, the Polish Private Equity Funds I and II and the Polish Enterprise Fund.
