"Building Emerging Europe Champions as a good way
for non-Sillicon Valley players"

IDCEE Conference 2013, Kiev
presented ...
MCI Management SA

Expansion Capital

Growth Capital

Venture Capital

 Founded in 1999, is the leading Internet and TMT ...
Development of MCI in the years 1999-2012
•
•

Creation of
MCI Sp. z o.o.

1999

IPO on Warsaw Stock
Exchange

2000

2001
...
The Leading Emerging Europe Technology Growth Investor
300M$ assets under management

200M$ own long term capital

Investm...
The Leading Emerging Europe Technology Growth Investor
syndicate Partner of Intel Capital

Company specialised in asset
ma...
Exit Trackrecord (30.06.2013)

IPO
listing
Year of invest.:
2008
Year of recap.:
2013
Net IRR:
43,4%

Year of invest.:
200...
Investment strategy: why Emerging Europe?
Assumed % of the investment portfolio
POLAND

CIS

TURCJA

20% - 40%

5% - 15%

...
Portfolio management
DACH
CIS
online store with baby care
products

a

leader of the e-fashion
market

leader of the e-tra...
From National to Regional Champion – ABC Data case
Leading B2B e-commerce platform for IT/consumer electronics distributio...
Leading B2B/B2C Internet Platform in CEE
Invia case – candidate for Emerging Europe Champion
e-Travel market leader in CEE and CIS.
The company was conceived in th...
Invia case – candidate for Emerging Europe Champion

2002
creation of Invia.cz, as
the fourth player on
Czech e-travel mar...
Successful regional exit case – Mall.cz (NetRetailHolding)
…generating the pipeline…
MCI has been following Mall.cz since ...
Mall.cz (NetRetail Holding) is the most successful e-commerce
company in the CEE operated in „Amazon” model
The exit valuation of the company was driven strongly by dynamics of revenue growth
since 2008. The company achieved a mar...
Building portfolio value – Mall.cz case
175% IRR,
4.1 x CASH
Participation

18.2%

18.2%
16.3%
11.5%

Investment

+38.5mln...
TVO’s vs. GLT’s
Time Vehicle Opportunities

Global Leaders of Tomorrow

e-commerce ->

Saas (software as a service) ->

ma...
We are welcome to support the best
enterpreneurs and projects
from Emerging Europe.
Thank you for your attention.
czechowi...
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IDCEE 2013: Building Emerging Europe Champions as a good way for non-Silicon Valley player - Tomasz Czechowicz (CEO & MP @ MCI Management SA)

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Tomasz Czechowicz - a graduate of Wroclaw University of Technology, Warsaw School of Economics and Executive MBA at the University of Minnesota.

In the years 1990-1998 Co-founder and CEO of JTT Computer SA, which he build into a leading Central European PC-assembly and distribution operations with USD 100M+ revenue.

From May 1998 Founder and CEO of MCI Group. After acquisition of funding throw IPO on the Warsaw Stock Exchange in 2001 the value of MCI’s investment portfolio grew from USD 8M to more than USD 200M. MCI is one of the most dynamic private equity groups of multistage character in the Central and Eastern Europe. Currently, with the use of 6 PE/VC funds: MCI.EuroVentures, MCI.TechVentures, MCI.BioVentures, MCI.CreditVentures, Helix Ventures Partners, Internet Ventures, MCI implements early stage, growth stage and expansion/buy-out stage investments in the sectors of new technologies and healthcare in Central Eastern Europe, as well as Germany and Austria (DACH), Turkey and the countries of the former Soviet Union (CIS).

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IDCEE 2013: Building Emerging Europe Champions as a good way for non-Silicon Valley player - Tomasz Czechowicz (CEO & MP @ MCI Management SA)

  1. 1. "Building Emerging Europe Champions as a good way for non-Sillicon Valley players" IDCEE Conference 2013, Kiev presented by Tomasz Czechowicz, Managing Partner, MCI Management SA
  2. 2. MCI Management SA Expansion Capital Growth Capital Venture Capital  Founded in 1999, is the leading Internet and TMT investor in the Emerging Europe region.  Managing team - high-class specialists, uniquely combining knowledge and years of experience in the fields of business development , finance and technology investments.  The Group executed a total of over 50 investment projects and executed nera 30 full exits.  The value of assets under management is over 957 million PLN  Between 1 January 1999 and 30 June 2013 MCI reached net rate of return (net IRR) on the level of 19.10% and ranked among the top of European private equity funds.
  3. 3. Development of MCI in the years 1999-2012 • • Creation of MCI Sp. z o.o. 1999 IPO on Warsaw Stock Exchange 2000 2001 Pioneer public market emission of five-year convertible bonds (for the first time by an investment fund) 2002 2003 2004 2005 • Creation of MCI Capital TFI SA Pioneer IPOs of MCI portfolio companies on NewConnect market on the first day of trading 2006 2007 • • • 2008 Launch of first fund with cofinancing from NCF and PARP Full exit from Bankier.pl (trade sale) entering Private Banking segment Pioneer debut of MCI bonds on the first day of trading on Catalyst market 2009 • Transformation into MCI Management SA Portfolio restructuring • • • First full investment exit (Process4E) First IPO of portfolio company (Travelplanet.pl) First buy-out (ABC Data) • • 2010 Share repurchase (about 3% publicly traded shares) 2011 2012 Creation of Internet Ventures (together with NCF and IIF) Launch of MCI.ImmoVentures IPO of ABC Data RECORD-BREAKING YEAR • Net assets 572.1 million PLN • New investments 95 million PLN (first projects in Russia and Germany) • Exits 200 million PLN, incl. record-breaking exit from Mall.cz for 38 million EUR
  4. 4. The Leading Emerging Europe Technology Growth Investor 300M$ assets under management 200M$ own long term capital Investment Strategy 50+ investments and 30 exits since 1999 Investment Team Executive Partners :  Situation focus :  building regional champions with proven, fast-growing business models in Emerging Europe  supporting candidates for global champions  supporting European champions in their expansion into Emerging Europe  supporting the champions of traditional economy in their transition to the digital economy  Sector focus:  e-commerce, cloud computing, fintech, BigData  digital healthcare / lifescience  mobile / digital entertainment, Internet / e-commerce enablers, Internet / e-commerce adaptation  Tomasz Czechowicz (CEO) http://www.linkedin.com/profile/view?id=665288& locale=en_US&trk=tyah  Sylwester Janik (Fund Manager MCI.TechVentures)  Norbert Biedrzycki (Fund Manager MCI.EuroVentures)  Magda Pasecka (CFO, PEM Project Manager)  Wojciech Marcińczyk (Fund Manager MCI.CreditVentures) Investment Partners :  Tomasz Danis (Fund Manager Internet Ventures)  Ilona Weiss (ABC Data Project Manager) Investment Managers :  Nicolas Jedraszak (Fund Manager Helix Venture Partners)  Fabian Bohdziul (MCI.EuroVentures)  Norbert Kruszewski (Internet Ventures) Investment Funds Investment area: TMT, finance/business services, e-commerce, distribution Investment value: 15 - 35 mln EUR AUM: 332 mln PLN Investment area: Investment area: e-commerce, mobile , Internet, mezzanine for technology companies digital media Investment value: Investment value: 1 - 15 mln EUR 1,5 - 25 mln EUR AUM: 54 mln PLN AUM: 333 mln PLN Investment area: cloud computing, Internet, software, mobile/wireless Investment value: 1,5 mln EUR + AUM: 40 mln PLN Investment area: digital media, Internet, software, mobile/wireless Investment value: 1,5 mln EUR + AUM: 100 mln PLN
  5. 5. The Leading Emerging Europe Technology Growth Investor syndicate Partner of Intel Capital Company specialised in asset management. member of Polish Private Equity Association Key Investments / Exit Value 100M + PLN Strategia inwestycyjna CEE: consumer electronics, dystrybucja, e-commerce Leading distribiutor. listed on Warsaw Stock Exchange Germany: e-commerce e-babycare leader Poland: consumer electronics, e-commerce – IT/consumer electronics market leader Russia: e-commerce e-fashion market leader Poland: e-commerce Poland: e-commerce; Leader of egrocery market among pure players Leading online e-fashion shop CEE & CIS: e-commerce e-travel market leader Leading IT group in Turkey. Czech Republic: digital entertainment Online games publisher and developer Other portfolio companies Leading online store offering luxury, custom ordered jewelery. Leader in online sales of ladies lingerie. Innovative diet supplement producer. Advanced navigation app for mobile. Innovative tools for legal industry. Financial product comparison engine. ImmoPlanet The first company in Poland to offer mobile advertising to clients. Real estate commercialisation via virtual tools. Medical diagnosis, DNA analysis. One of the largest distributors of search engine and contextual ads in Poland. NAV in the years 1999 - 2013 AUM in the years 1999 - 2013 740 155 24 50 41 23 AUM w mln. PLN 572 498 526 NAV w mln. PLN 15 16 25 207 763 788 830 266 55 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 35 71 74 39 33 41 55 117 237 303 1100 418 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
  6. 6. Exit Trackrecord (30.06.2013) IPO listing Year of invest.: 2008 Year of recap.: 2013 Net IRR: 43,4% Year of invest.: 2005 Year of dinvest.: 2013 Net IRR: n/d Year of invest.: 2007 Year of dinvest.: 2012 Net IRR: n/d Year of invest.: 2010 Year of dinvest.: 2012 Net IRR: 174,42% Year of invest.: 2007 Year of first partial exit: 2008 Net IRR: 29,28% Year of invest.: 1999 Year of dinvest.: 2011 Net IRR: 14,12% Year of invest.: 2000 Year of dinvest.: 2011 Net IRR: 59,95% Year of invest.: 2002 Year of dinvest.: 2011 Net IRR: 104,92% Year of invest.: 2000 Year of dinvest.: 2009 Net IRR: 30,64% Year of invest.: 2004 Year of dinvest.: 2008 Net IRR: 189,33% Year of invest.: 2001 Year of dinvest.: 2010 Net IRR: 17,03% Year of invest.: 1999 Year of dinvest.: 2008 Net IRR: 8,29% Year of invest.: 2000 Year of dinvest.: 2005 Net IRR: 20,62% Year of invest.: 2006 Year of dinvest.: 2012 Net IRR: 9,01% CKAdax Year of invest.: 2005 Year of dinvest.: 2008 Net IRR: 83,89% Year of invest.: 2007 Year of dinvest.: 2008 Net IRR: 109,68% Year of invest.: 2005 Year of dinvest.: 2007 Net IRR: 74,44%  Realized exits value: 310,8 mln PLN  Realized exits value with partial exits: 348,9 mln PLN Year of invest.: 2010 Year of dinvest.: 2011 Net IRR: 22,13% Year of invest.: 2004 Year of dinvest.: 2005 Net IRR: 238,26% Year of invest.: 1999 Year of dinvest.: 2000/2001 Net IRR: n/d  IRR: 19,10%  IRR on realized exits with partial exits: 23,35%
  7. 7. Investment strategy: why Emerging Europe? Assumed % of the investment portfolio POLAND CIS TURCJA 20% - 40% 5% - 15% 5% - 25% 5% Sources of growth CEE Unique experience - MCI Management is present in the region since 2004 / limited competition from other PE / VC / use of a specific investment potential in the Czech Republic, Hungary and in the Baltic States/ large supply companies that aspire to a leadership position in the global market(LogMeln , AVG, Avast, GetJear) and regional market (Invia, Netretail, Allegro) direct funding (round B and C) companies to achieve market leadership in CEE / Emerging Europe or other VC investments in companies with the potential for global leaders DACH Partnerships in the early phase of growth with the potential to achieve position of a leader (national / global) /growth phase (CEE leaders, and Global leaders) / expansion phase (country leaders / area leaders in Central - Eastern Europe / European and Global leaders ) focus on e-commerce / Marketplaces / ecommerce enablers (round B and C) in syndication with reputable investors CIS investments in the sector in the area of ​Internet / TMT companies, taking into account the different stages of growth investments (Round C and D) combined with international strong partners present on the market Already developed relationships with key MCI Management investors / projects and the use of MCI experience for the expansion of the national leaders in the region in the CEE area ​/ largest Internet market in Europe (Mail.ru, Yandex.ru, Ozone, KupiVip, Kaspersky) with the largest value of IPOs in the segment / greatest returns for VC / PE (4-10 times higher than the exit-valuation in Poland) because of the size of the players and potential development of the region TURCJA POLAND Areas of strategy DACH 25% - 50% Region CEE syndicated investments with reputable partners Large market, quickly adapting new technologies, one of the leading markets and economies in Europe and in the world, exporting experience MCI Management relationships with leading VCs and incubators in the region / experience in the use of e-commerce and online media / transition region from the modelcopycat in the model "emerging world champions candidates" eg. CitiDeal / Groupon, DeliveryHero, Zalando.de, Bigpoint
  8. 8. Portfolio management DACH CIS online store with baby care products a leader of the e-fashion market leader of the e-travel market in Russia (Invia.cz's investment in Travelata) online store with custommade jewelry POLAND CEE e-grocery market leader leader in consumer electronics retail publisher/developer of online games TOP 10 on Facebook e-fashion market leader e-travel market leader leading IT distributor leading IT distributor navigation app for mobile phones contextual advertising distributor financial comparison engine TURKEY leading IT distributor
  9. 9. From National to Regional Champion – ABC Data case Leading B2B e-commerce platform for IT/consumer electronics distribution on the CEE market.  ABC Data S.A. is the market leader in distribution of IT and consumer electronics in Poland and the only company operating directly in eight countries of Central Eastern Europe. The company has offered computer equipment, software, consumer electronics and services for over 20 years. ABC data boasts the largest offer on the market, with over 56,000 products from more than 300 brand-name suppliers.  Thanks to systematic development and many years of investments in online customer service platforms, the company has the leading position in online sales.  In June 2011, ABC Data S.A. began selling consumables under its own private label, Colorovo. Currently, the company offers more than 400 products under this brand. Since its launch, the brand expanded its product portfolio with cleaning accessories for computer screens and peripherals. Furthermore, it also introduced computer cases for office applications and gaming as well as the CityTab tablet. The Colorovo brand products are available throughout the distribution network of the ABC Data Group, in all countries where the company has its operations.  Since June 2010, the company is listed on the Warsaw Stock Exchange. • • • • • • • • Leveraged buy-out closing • Partial MBO (management + key employees) • Identification of priorities -> introduction of Aim Appraisal 2008 Full acquisition debt repayment (3 years before due date) IPO at WSE / PLN 50 M Merger of SPV with Op-co Acquisition of Romanian IT distributor / Entry into Lithuania F/X accounting changes Stabilization of Optimus warrants Awarded again the best CEE IT distributor 2009 • Operational improvements leading to higher margins • IPO: prospectus + equity story • Partial acquisition debt repayment (improvement of CCC) • Vendor loan restructuring • Partial MBI • Awarded the best CEE IT distributor 2010 • B2C e-commerce + cloud • New products: white goods, brown goods, mobile, electroequipment, office materials + new services • Entry to BU+ HU • Further operational optimisations 2011 • • • • • Own brand Partial post IPO exit Upgrade of management Post acquisitions operational integration Entry to Latvia and Estonia 2012
  10. 10. Leading B2B/B2C Internet Platform in CEE
  11. 11. Invia case – candidate for Emerging Europe Champion e-Travel market leader in CEE and CIS. The company was conceived in the Czech Republic in 2002, gaining the leading position on the online travel market in Czech, Slovakia and Hungary. Invia offers travel packages, hotel bookings and flights. The company cooperates with over 300 tour operators and offers more than 8000 travel packages making it the broadest offer on the market. The Invia.cz website has over 210,000 registered users generating about 700,000 unique page views every month. In June 2009, the company acquired NetTravel.cz giving it control of 60% of the e-travel market in the Czech Republic and Slovakia. In 2011, the company acquired Travelplanet, the Polish e-travel leader significantly strengthening its position on the Polish market. In H2 2012, the company began expansion to the hugely prospective Russian market where it develops its activities through the Travelata project. Most significant events • Launch of new version of the online holiday travel package website, Travelplanet.pl • Strengthening the leading position in online sales of travel packages in Russia – Travelata.ru Consolidated results of Invia.cz 2010 2011 2012 ∆ in % 2013 est. revenues in million EURO 6.6 9.0 10.5 +19% 12.5 EBITDA in million EURO 1.4 1.8 2.5 +10% 2.8
  12. 12. Invia case – candidate for Emerging Europe Champion 2002 creation of Invia.cz, as the fourth player on Czech e-travel market 2004 commencement of international expansion – entering Slovak market 2003 • Invia takes the lead on its native market • Internet Travel Holding AG invests 11m CZK in Invia 2006 launch of sales website in Poland 2007 launch of sales website in Hungary 2005 breakevenpoint • 2009 Invia outgrows the other three significant players in Czech altogether, acquisition of NetTravel.cz (2nd largest e-travel player in Slovakia and 3 rd in Czech Republic) 2008 investment of MCI (acquisition of 50,10% shares) • • ~+40% r/r +80% r/r in 2012 (organic growth) and acquisition of TravelPlanet) launch of sales website in Romania turnover exceeds EUR 65M 2012-2013 Invia expands into CIS with Travelata. New Russian entity quickly becomes leader in online travel packages 2010-2011 Invia & Travelplanet signed the LOI - aim to merge their potentials to obtain economies of scale and make use of the synergy effects. In 2011 Invia acquired a controlling stake in TravelPlanet from MCI
  13. 13. Successful regional exit case – Mall.cz (NetRetailHolding) …generating the pipeline… MCI has been following Mall.cz since 2006. In 2008 Round B closed without MCI’s participation. MCI identified a number of risks at this stage related to the IT system, international expansion objectives and key men in the Company. We found also premoney valuation of the Company as too ambitious vs. the risks and requested funding level. The reality confirmed our expectation. In 2008-2009 Mall.cz was implementing a new integrated IT system, which led the company through difficult period of transformational change. It was certain that the new state of the art IT system (SAP) was a precondition of the future successful expansion. …investing… After overcoming the challenges of the implementation of the IT system we fount the company ready to scale up its business in 2010 in Czech Republic and to roll it out to other countries. The company started Round C financing. Already at this stage we found the expected valuation justified taking into account the ready to go potential. MCI invested 5mln EUR and acquired 11.5% stake in the Company. MCI structured the transaction. During the next two years MCI has been increasing its stake gradually to above 18%. …portfolio management… MCI played an active role in value creation of the Company leveraging its ecommerce , regional and transactional experience. We assisted the team in redefining the regional expansion strategy, supported acquisitions, supported creation of the top second level management team. We shared our best practices from other portfolio companies – ABC Data and Invia and encouraged the Company to build a marketing strategy based on top brands like Samsung. The Company managed to achieve top operational excellence in a very short time and with our support managed to leverage this value through successful scale up of the business in the CEE Region. …exiting… MCI initiated the exit process in the end of 2011. Basing on our experience we found the Company exit ready and we built our confidence in successful exit after organizing a pre-pithing round with strategic investors which confirmed strong appetite for ecommerce growth leaders in the CEE. As a next step we built interest of leading London based investment banks in the process and ran competitive selection. The bidding winner of a competitive tender organized by an investment bank was Naspers. At this stage MCI spent long hours negotiating the terms and the agreement alongside other exiting investors. So this is how we made 175% IRR, 4.1x cash-on-cash return on Mall.cz
  14. 14. Mall.cz (NetRetail Holding) is the most successful e-commerce company in the CEE operated in „Amazon” model
  15. 15. The exit valuation of the company was driven strongly by dynamics of revenue growth since 2008. The company achieved a market leading position and implemented a scalable business model. MCI participated in rounds C and D. Revenue (LA) Orders (RA) MCI isfollowing the company Although we were following the Company since 2004 we deployed capital only in 2010 in Round C after the Company was operationally ready for regional expansion and mitigated key operational risks. From 2010 we were working with the Company closely and were increasing our stake gradually through participation in Round D and buying shares of other investors in a secondary lucrative transactions. Round B Value creation Rounds C and D Exit
  16. 16. Building portfolio value – Mall.cz case 175% IRR, 4.1 x CASH Participation 18.2% 18.2% 16.3% 11.5% Investment +38.5mln EUR Q2.2012 -4.99mln EUR Q3.2010 Preparation of investment FUNDRAISING -0.7mln EUR Q3.2011 Round C Phase 1: 2006-2010 -3.5mln EUR Q3.2011 Round D From individual investors Phase 2: 2010-2011 Investment Phase 3: 2010-2011 Supervision MCI exit Phase 4: 2011-2012 Exit process MCI was following the company since 2004 and invested for the first time in round C in Q3’10. MCI transferred e-commerce experience and co-managed the exit process. The company was acquired by MIH Allegro B.V. (Naspers)
  17. 17. TVO’s vs. GLT’s Time Vehicle Opportunities Global Leaders of Tomorrow e-commerce -> Saas (software as a service) -> marketplaces -> BigData -> fintech -> Mobile Internet ->
  18. 18. We are welcome to support the best enterpreneurs and projects from Emerging Europe. Thank you for your attention. czechowicz@mci.eu

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