Abris Capital sees Central Europe hitting PE radar in 2024

Consumer dominates week’s deals.

We’re kicking off today’s Dealflow with a 2024 outlook piece that has a political touch as Abris Capital’s Edgar Kolesnik sees a renewed private equity interest in Central Europe in 2024. We will also dwell into why politics could play a role.

In this week’s deal summary, I bring you the star sector of the week – consumer— with four deals to report while holiday shopping is in full swing. Wellness is a subsector that got particular attention this week.

The deals are: Partners Group to acquire a paper-based hygiene product manufacturer; TA-, Warburg-backed Epassi buying a corporate health and wellness benefit service provider from another PE firm; TPG, Investcorp agreeing to invest in a SEN provider and Verdane leading an investment round in a technology platform for sports and wellness.

Politics and PE 

Central Europe’s return to its previous growth trajectories, along with the peculiarities of its investment landscape, could lead to the region witnessing a revived interest from private equity in 2024, Edgar Kolesnik, partner at Abris Capital Partners, told PE Hub Europe’s Craig McGlashan in the latest of our 2024 outlook series.

Kolesnik believes politics could play a role as Donald Tusk’s return to Poland’s prime ministership this week following October’s election is expected to stimulate foreign investor interest.

Here’s an excerpt from the interview:

What’s your outlook for exits in 2024?

I would like to believe that IPOs will come back, but I don’t expect great activity before the summer. However, there are a number of processes in the starting blocks, and these could be a litmus test for investor appetite.

Trade buyers will continue to be selective, focusing on strategic acquisitions rather than building scale and market share. This approach is the result of the cost of funding remaining high, and therefore balance sheets remaining contracted, but also performance indicators across a number of industries being at low levels.

Financial sponsors will remain a strong exit route, as they continue hunting for trophy assets or assets they can bolt on to existing platform investments.

While I am not overly optimistic for most of Europe, the possible exception is Central Europe, where many economies have already returned to their growth trajectories and where investors may feel there are opportunities to tap into this growth.

Portfolio companies that have successfully adapted their commercial and operational activities to the current market conditions, and that are growing profitably, are still of interest to strategic and financial investors. Moreover, due to the relatively smaller pool of resilient and strong companies, exit valuations can be attractive.

Finally, the result of the recent election in Poland is expected to encourage foreign investors, and there is already growing interest from some Western European financial investors that have not previously invested in the region. The expected release of EU funds will also be a boost for many businesses.

Check out the full article here to know more about Kolesnik’s outlook for 2024 and the sectors that are appealing to him going into 2024.

Consumer in mind

With all of us preparing to bid adieu to 2023, let’s wrap up the halfway point of December with some optimism as the consumer sector shines again.

Constantly evolving consumer behaviours coupled with disruptive technology are transforming the sector. PE is seeing the potential as we reported four consumer deals this week.

We’ll begin with the latest, as Verdane led a €95 million investment in Urban Sports Club, a technology platform for sports and wellness.

HV Capital and ProSiebenSat1 also participated in the funding round in the Berlin-based business.

The company plans to invest the capital into accelerating its B2B business across its seven European markets: Germany, Netherlands, France, Belgium, Spain, and Portugal and soon also Austria, according to a release.

Special education needs

Next up is TPG and Investcorp agreeing to invest in Outcomes First Group (OFG), a UK-based education provider to young people and adults with autism, learning disabilities and special education needs (SEN).

Stirling Square Capital Partners is the seller.

TPG, via the Rise Fund, will make a majority investment in Bolton-based OFG, with Investcorp making a minority investment.

Eyes on wellness

Epassi Group, a portfolio company of TA Associates and Warburg Pincus, has acquired Exercite, a corporate health and wellness benefit service provider in Germany and the Netherlands.

Waterland Private Equity and Exercite’s founders are the sellers.

The transaction will give the combined company an enterprise value of over $1 billion, according to people familiar with the matter.

One more for wellness

Partners Group has agreed to acquire Velvet Care, a European paper-based hygiene product manufacturer, from Abris Capital Partners.

Klucze, Poland-based Velvet Care generated €277 million in revenues in 2022.

Key value creation initiatives will include expanding international reach, broadening the product portfolio with a focus on high-growth categories and making targeted acquisitions, according to a release.