Enterprise Investors acquires controlling stake in Wema

Following the transaction, the main shareholders of the company are the fund managed by EI and the founders. The founders will keep their current positions as members of the supervisory board.

Founded almost 20 years ago in Rumia, a small city on the Polish coast, Wema was originally a family business. Today the company sells ceramic tiles, bathroom sanitary ware, bathtubs, showers, and bathroom accessories through a network of 15 owned and 3 franchised stores located in northern and central Poland and is Poland’s largest specialist bathroom retailer. The founders have built one of the largest wholesale firms of its kind in the country.

Over the last three years Wema substantially improved its revenues and profits. Last year the company’s sales amounted to almost PLN 200 million (approx. €60 million) and net profit was PLN 16 million (€5 million). The growth of revenue per store was around 30% in 2007, while wholesale revenues and sales to other retailers improved by almost 40%. The results were significantly above the market average.

“Our investment in Wema is a typical EI transaction in that we will become shareholders of the company alongside private entrepreneurs. The founders gave up control and kept a minority stake in the company as they feel confident that we have the experience and expertise to substantially support Wema’s countrywide expansion,” said Agnieszka Kowalska, a partner at Enterprise Investors leading the investment. She added: “The founders accepted EI’s plan of changing the Wema store concept to make the stores more functional and customer-friendly. At the same time we are planning to continue the wholesale activity at the current level.”

Enterprise Investors has been active since 1990 and is one of the largest private equity and venture capital investors in Central and Eastern Europe. The firm manages seven private equity funds totaling €1.7 billion. To date, these funds have invested €1.1 billion in 108 companies from a range of sectors and have exited 91 investments with total proceeds of over €1.3 billion.

Enterprise Investors has built up significant experience as the leading private equity player in Poland’s consumer goods and retail sectors, having invested €395 million in consumer goods since 1993.

In the past EI developed several retail chains, including the Polish supermarket chain Emperia (formerly Eldorado, with Stokrotka and Groszek supermarkets) and Apteki Polskie (a chain of pharmacies). EI has financed several expansion projects: the Sfinks chain of restaurants, the W.Kruk and Deni Cler upscale jewelry and fashion salons, and Artima, the Romanian food retailer (sold to Carrefour in 2007). As an investor in the Polish fashion retailer LPP, Enterprise Investors helped launch its brands (Reserved, Cropp) in Poland and other CEE countries. EI also owned 100% of Nomi (a Polish chain of DIY stores).

Last year Enterprise Investors’ funds acquired 100% of the floor-covering retailer Sklepy Komfort (which has over 100 stores in Poland) and are successfully expanding it now.

EI’s portfolio also includes a 48% stake in Nay, the largest chain of stores in Slovakia selling white and brown goods.

EI’s advisors to the Wema transaction were Gide Loyrette Nouel, Acreo (tax advisor) and Internal (financial advisor).