Equity group launches club of top managers
Private equity group Dresdner Kleinwort Capital (DrKC) and Pedersen & Partners, an executive research firm, last month set up Central Europe's first "club" of outstanding Polish chief executive officers who have the talent and know-how to acquire companies through management buy-ins (MBI) or buyouts (MBO).
The Warsaw club, modeled after a similar group in the U.K., attracted some 50 executives to its first meeting at DrKC's office last week. According to DrKC, the aim is to select no more than 30 top managers who will become members in the club and be offered opportunities to take over companies with the fund's financial support.
MBI and MBO, an emerging form of company acquisition on the private equity market in Poland, has become more common in recent years as larger numbers of local managers are proving they have the ability to execute buy-in or buyout deals. "When we were four years into the free market (1993-1994), there were few managers with sufficient experience to be a CEO unless they were imported," said Robert L. Conn, managing partner of Innova Capital (IC), a Warsaw-based private equity manager. "Now you have a lot of people who have 10 years of experience, and extremely tough experience because it's a tough environment."
According to Roger de Bazelaire, regional director of DrKC's Central and Eastern European private equity unit, the club's selection process will be rigid with members needing to prove their experience. "Membership is limited by the quality and experience of managers," de Bazelaire said. "We're focused on finding CEOs and CFOs. They should be Polish managers with Western experience in terms of doing business. One of our members, for instance, spent 10 years abroad and came back to Poland in 1994 and is now looking to do an MBI. Perfect candidates are between 35 and 40 years of age." The club plans to meet several times a year with guest speakers such as lawyers, bankers or people who have done MBI and MBO deals before in the U.K.
After a successful rollout in Poland, DrKC plans to set up additional clubs in the Czech Republic, Slovakia and Hungary, creating a regional network of high-profile managers. "Being a member of the club doesn't guarantee (the CEO) capital, but it guarantees a strong hearing and support in putting their ideas together," said Janusz Heath, head of DrKC's Central and Eastern European private equity unit, which manages the Dresdner Kleinwort Benson Emerging Europe Fund. "They may not necessarily do a buyout with us as we just want the right of first refusal to look at the deal. It takes a long time to do a buy-in or a buyout so if we can work with managers now, they get to know us and we get to know them."
But DrKC is not the only private equity fund trying to attract talented Polish managers. IC, in the process of closing its third fund targeted at e150 million-e180 million, has hired a talent officer responsible for developing the company's management database. "The talent issue is the area that we're trying to build a clear competitive advantage," IC's Conn said. "One thing that crossed our mind was an MBI and MBO club like the one set up by Dresdner (DrKC), but we've decided to be more targeted. So we started from our own portfolio with quarterly meetings of all CEOs. The idea is to have a small group of absolutely exceptional people rather than have a very large club, which may or may not lose momentum. We do 4-5 new investments every year so you need five great CEOs a year." IC's first meeting of top executives was held two weeks ago, and according to Conn, the group may be expanded to include managers from the database the company has accumulated over the past eight years. "There are 11 investments officers (at IC) and every week they meet between five and 10 new people," Conn said. "Perhaps two of them will be put in the database. Our focus in the database is CEOs. At the moment (their names) sit in the database and then quite often we propose a target company to one of the potential CEOs and say, look, we've found this opportunity, are you interested?' "
Of the 20 deals IC has executed, four were MBO or MBI transactions, Conn said. "Carman, the automotive services company, formerly Max Auto Express, is a perfect example," he said. "In 1999, we approached Makro Cash&Carry, the seller, to conduct the MBI and brought in Henryk Siodmuk as CEO. He was one of managers from our database who we nurtured' for five years."
Anna Kocinska
