Mezzanine takes off in central Europe
Just a few years ago, mezzanine finance was very much an alien concept in central Europe. That changed in 2003 with the arrival of the region’s first dedicated mezzanine fund. Today, mezzanine provision is booming, and its proponents hope it can play a significant part in the leveraged buyout boom predicted for the region. Kathryn Wells reports.
When Mezzanine Management raised its €115 million Accession Mezzanine Capital fund in 2003, it was very much a trailblazer. Although Austria’s Erste Bank, among others, had provided forms of mezzanine through its Prague-based acquisition finance unit from as early as 1997, the new fund claimed the distinction of being the first dedicated mezzanine fund in central and eastern Europe.
AMC has made six investments to date: three in Poland, two in Bulgaria and one in Hungary. It expects to close several deals in the next couple of months in the Czech Republic, Poland and Romania.
“Until recently, there was only one game in town,” says Joanna James, managing director for central and eastern Europe at Advent International, one of the leading international private equity firms operating in the region. “We have been wanting to see more competition, as it improves the terms on offer.”
James’s wish seems to have been granted. In addition to Accession Mezzanine, and other regional providers such as Invest Mezzanin, Investkredit’s fund, which invests in Germany, Austria, and increasingly central Europe, a second sizeable dedicated fund has been set up.
In October 2005, emerging markets investment firm Darby Overseas Investments secured €100 million to extend mezzanine loans to the new EU member countries, and emerging Europe more generally.