DKC with sweet tooth

Alan Heath
20-03-2002, 00:00

Dresdner Kleinwort Capital is currently bringing confectionery producer Mieszka onto the market and is not discounting further investments. It is also trying to introduce management buy outs to this country, something which despite being very common in many parts of the world, is treated with a great deal of suspicion here.

The stock market commission KPWiG is currently considering the request of Dresdner Kleinwort Capital to increase its stake in Raciborz based confectionery producer Mieszko to over fifty percent.. If the KPWiG gives the green light then the family based firm will get a strong backer and other shareholders can expect a call on their stock which will no doubt lead to a handsome profit for them.

Roger de Bazelaire, director and partner of the Dresdner Kleinwort Capital fund says that the investment is worth USD10m E USD15m. His fund would then manage the company jointly with the Gajdzinski family who started the confectionery producer. The company has already had foreign investors and is considered to be very clean in its business activities.

The strategy of the new backer is clear. It wants to convert Mieszko from a regional company into a national leader. This will be achieved by internal growth and acquisitions. Two thirds of this market is occupied by international giants like Nestle or Cadbury. The remainder of the market is occupied by around ten or so companies like Mieszko which are likely to welcome consolidation.

DKC is a private equity which seeks a stake in experienced firms which still need a little extra shot in the arm to increase the speed of development. This is clearly a medium to long term strategy which shows that the company has faith in the Polish market.

The company is seeking three to five year projects worth at least USD3m with a 35 to forty percent rate of return. Exit strategies include a stock market entry or, as is more likely in Poland, finding a strategic investor. This situation could change if the Warsaw stock market is consolidated with western markets and turnover increases.

DKC manages around USD225m in central Europe. Two thirds of this funding came from the Californian pension fund CalPERS and the remainder from other sources such as Dresdner Bank.

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