TALENT: With an enviable track record of having made all of his previous start-ups into leaders in their field, Liviu Stanescu of Five's now has big plans for his latest venture on the corporate and musical events market. Stanescu sat down with BR. »page 7
ROMANIA’S PREMIERE BUSINESS WEEKLY
DECEMBER 6 – 12, 2010 / VOLUME 14, NUMBER 45
FASHION REPORT ID SARRIERI, MUSETTE AND JOLIDON ARE AMONG THE LOCAL RETAILERS AIMING TO CONQUER FOREIGN MARKETS WITH THEIR UPMARKET FASHION BRANDS »PAGE 18 NEWS
RETAIL•FMCG•HEALTHCARE TELECOM•PROPERTY•MEDIA• AUTOMOTIVE•ONLINE
Romtelecom stake up for sale at EUR 1 billion The Romanian government is planning to sell its stake in Romtelecom for EUR 1 billion » page 5
Orange invests EUR 4 mln in store franchise network Mobile operator Orange has spent more than EUR 4 million on its franchise program » page 5
Computer virus robs Holcim of EUR 15 mln
The multi-million euro deals of the boom years may have gone but it's by no means all quiet on the Romanian front. Key players from energy, communications, retail and medical and financial services have all got commentators talking with major market moves over the past year. Business Review gives an overview of the transactions of note that have been signed, sealed and delivered in 2010. »page 10
Cyber-criminals have stolen about EUR 15 million worth of EU carbon-dioxide permits from the Romanian branch of cement firm Holcim » page 5 PROPERTY
Victoria City Center gets construction permits CD Capital Partners and Benevo Capital Corporation have received the authorities’ OK to proceed with the Victoria City Center development, scheduled to start in 2011 » page 19
www.business-review.ro Business Review | December 6 - 12, 2010
NEWS 3
NEWS in brief WEEK in numbers
34 million euros will be spent by the National Road Company CNADNR on modernizing 11.6 km of national road 5
LETTER FROM THE EDITOR The hard work pays off
Bill Avery Founder bill.avery@business-review.ro
2.5% the drop in Romania’s GDP for the third quarter of this year compared to the same period of the previous year, standing at RON 136.6 billion
20 Courtesy of Petrom
One of the challenges we have all faced in these past couple of years is that the local Romanian business climate has just been reeling from one crisis to another. There was the American financial crisis, the European bank crisis, the Greek bail-out and the Romanian taxation crisis. Since early 2009, most firms have been in retrenchment mode, and this pullback, besides hurting everyone's pocketbook and collective ego, has simply made business life less interesting, or even fun. It is hard to slog it out month after month when you are just getting by. This Romanian stasis is mainly due to the political leadership, and an unwillingness until recently to engage with the private sector to stimulate hiring and investment. Our event this week will showcase the efforts of business communities to reach out and suggest improvements to the tax code and other issues that cripple Romanian firms. For our part, Business Review has organized more than 20 bilateral conferences in the past two years, from Britain to Kazakhstan, Greece to Holland. Tuesday's event will attempt to wrap up the efforts we've all made to have all our voices heard. And, after all that talking, some of us will no doubt be thirsty, which is why we'll have a business cocktail reception for our guests and BR Club members. Since the start of the year, we've established www.business-review.ro as the top English-language business site in Romania, with hundreds of new visitors every month. The site is an important way for us to keep our readership informed about upcoming business and cultural events. And our re-design makes a statement about where we want to go, with a bigger and bolder format. After nine years, we figured a change would do us good. Who said business in Romania wasn't fun?
PICTURE of the week Petrom inaugurates new company HQ: EUR 130 mln Petrom City Petrom has inaugurated its new headquarters, the EUR 130 million Petrom City. The development is located in north Bucharest. It will bring together the company’s 2,500 employees from the seven headquarters it had in Bucharest and Ploiesti. Petrom City consists of two office buildings, a data center operated by IBM, a five MW electrical power plant and a 900-place parking area, all on a built surface of 100,000 sqm. The buildings in the project have an energy efficiency of 90 percent, compared to the average of 40-60 percent in recently built blocks.
COMPANY NEWS Swedish company MoSync opens office in Cluj-Napoca Swedish software company MoSync has opened an office in Cluj-Napoca and is currently searching for specialized staff. According to recruiting site eJobs, the company is currently advertising project manager positions. It also has four vacancies for mobile software engineers whose task will be mainly to program features for MoSync SDK together with occasional work on the MoSync product core and also customer projects (developing Mobile apps in MoSync).
Ascendis launches HR consultancy division Ascendis has launched a consultancy division for human resources called Ascendis HR, which is intended to help client companies increase their profitability by making their HR processes more efficient. The new division will be led by Mihai Moghior as managing partner. He joined Ascendis in October after leading Brainspotting, the first consultancy company specialized in recruitment for the IT&C domain in Romania.
BDR Associates predicts 2010 turnover to beat USD 1.8 mln BDR Associates Communication Group, the exclusive associate in Romania of the Hill & Knowlton international group, estimates that its turnover for 2010 will ex-
km – the length of the Bucharest and Sibiu new ring-roads inaugurated last week
ceed USD 1.8 million. Over the past five years, the agency has had an average turnover of USD 1.8 million, the peak year being 2007 when it stood at USD 2.7 million.
ENERGY Romania among most attractive countries for green energy investments – E&Y study Romania is now among the most attractive 30 countries for green energy investments, in a league table drawn up by the consultancy firm Ernst & Young (E&Y). Romania is in 22nd position with 43 points. The study cites the EUR 1.1 million investment made by energy company CEZ in Fantanele and Cogealac, as well as the wind farm projects by Iberdrola, Enel, Energias de Portugal, RWE and Verbund. Along with Romania, other newcomers are South Korea, Egypt and Mexico. China heads the list.
LEGAL Pop Pepa partners with Martinez-Echevarria Pop Pepa Attorneys-at-Law has partnered with Spain-based law firm Martinez-Echevarria–Pérez–Ferrero to expand its portfolio of foreign clients, especially Spanish ones. Martinez-Echevarria will benefit from a local platform to serve Spanish corporations investing in
www.business-review.ro Business Review | December 6 - 12, 2010
4 NEWS
NEWS in brief Romania. The two firms will cooperate on a “best friends” basis on the Spanish legal market and on the Romanian legal market, respectively. Martinez-Echevarria Bucharest, which has a team of five lawyers, will be integrated into the office premises of Pop Pepa, where a Spanish desk will be consolidated for assisting Spanish companies.
EUROPEAN UNION Romanian economy not out of woods yet, says EC The economic recovery which is currently underway in EU countries will continue and GDP is expected to grow by around 1.75 percent in 2010-11 and by
around 2 percent in 2012 but with uneven progress across member states, according to the European Commission (EC) economic forecast. GDP growth in 2010 is so far exceeding expectations, especially in the second quarter. The recovery also appears to be broadening out but unevenly across member states. Romania’s real GDP growth is expected to decline by 1.9 percent this year as the local economy “remains mired by weak domestic demand”. The situation should turn around in 2011, with real GDP forecasted to increase by 1.5 percent. In 2010 the EC says that GDP is projected to contract in Greece, Latvia, Romania, and mildly in Bulgaria and Ireland. By 2011, all EU countries, with the exception of Greece and Portugal, are expected to be out of recession.
EBRD opens EUR 200 million co-financing framework for local water utilities The EBRD has opened a EUR 200 million co-financing framework for water utilities in Romania. It is intended to mobilize additional investments of close to EUR 1.5 billion in Romania’s water and wastewater infrastructure. SC Raja SA Constanta, one of the largest water utilities in Romania, operating in the counties of Constanta and Ialomita, is the first beneficiary under the new framework. The EBRD is providing the company with a EUR 33 million loan to part-finance the extension and repair of water supply and wastewater collection systems in a total of 24 localities in the two counties.
BUCHAREST& COMMUNITY Romania celebrates National Day with freezing rain and no president Romania’s capital city was marked by extreme weather conditions on its National Day, with Otopeni airport canceling 47 of its flights and the Romanian president missing the festivities in favor of the OSCE forum in Astana. No cabinet minister attended the military parade held at Arcul de Triumf. The prime minister, Emil Boc, received the military honors in the absence of the president, as Traian Basescu had designated him and not Senate president Mircea Geoana to do so. An estimated 2,500 spectators attended the parade, during which around 1,500 servicemen passed beneath the Arcul de Triumf monument, representing all of Romania’s military forces. Traffic was diverted from the area on account of the events while PM Boc was reportedly booed by some members of the audience.
Bronze statue of King Carol vandalized on inauguration day The unveiling of a new equestrian statue of King Carol of Romania (who ruled the country between 1866 and 1914) had to be postponed after being daubed with political graffiti. The monument, erected in the center of the capital, in Piata Revolutiei (Revolution Square), was scheduled to be unveiled on Romania’s National Day, December 1. However, some time during the previous night the statue was vandalized, with derogatory messages against Bucharest’s mayor, Sorin Oprescu – “Mr. Oprescu, why isn’t the national stadium ready, as you promised? Resignation!” – written in red paint, on the side of the sixmeter base, according to media reports. The words “Honor to him!” had also been added above the name of the king. The 13m statue, which was created by sculptor Florin Codre, is made entirely out of bronze.
REGIONAL NEWS UniCredit to open 900 European branches, 300 in Romania and Turkey each UniCredit SpA plans to open 900 new branches in Central and Eastern Europe, and more capital is to be allocated to Central and Eastern Europe. The 900 new branches, which will be added to the lender’s 3,860 in the region, will be opened in the next five years. Of these, 300 each are planned for Turkey and Romania each, 120 will be opened in Hungary and the remaining 180 cover Russia, Bulgaria and Serbia. Federico Ghizzoni, CEO of Unicredit, said the expansion would not require the bank to increase its capital.
www.business-review.ro Business Review | December 6 - 12, 2010
NEWS 5
POWER
TELECOM
Romtelecom stake up for sale at EUR 1 bln
RCS&RDS launches Zece TV channel
T
Courtesy of Romtelecom
he Romanian government has announced its intention to sell its stake in Romtelecom, which is owned partly by Greek group OTE and partly by the Ministry of Communications. The state hopes it will get EUR 1 billion for its share. “The Ministry of Communications will take into account the market realities and will not sell the share package at any price,” said Valerian Vreme, the communication minister. OTE holds 54.01 percent of the former national telecom operator, and the Ministry of Communications the other 45.99 percent. German operator Deutsche Telekom has a 30 percent participation in OTE. The government has asked OTE officials to come up with an offer for its shares in Romtelecom by the end of the year. State officials are also considering listing the shares on the Stock Exchange A meeting took place on this issue between Marius Fecioru, state secretary in the Ministry of Communications, and Michael Tsamaz, president and CEO of OTE, Yorgos Ioannidis, CEO of Romtelecom, and Guido Kerkhoff, member of the administration board of Deutsche elekom AG. OTE representatives said they would analyze all the available options, so that the decision made benefits all shareholders.
Yorgos Ioannidis, CEO of Romtelecom Romtelecom posted revenues of EUR 181.5 million in the third quarter of 2010, a 6.5 percent decline on the same period of the year before when it made EUR 194.2 million. ∫ Otilia Haraga
Related news on the web • Re-vamping, re-building, re-branding • Online stores get operators’ attention
Orange invests EUR 4 million in store franchise network
TELECOM
Computer virus robs Holcim of EUR 15 mln in EU carbon permits
A
companies, forcing them to buy permits to cover excess emissions and allowing firms sell them when emissions are reduced. EU permits for December rose 8 cents or 0.5 percent to EUR 14.84 a metric ton on London’s ICE Futures Europe exchange. The Commission said national registries’ security measures are the responsibility of the 27-nation bloc’s member states. Last week the German registry DEHSt was shut down for two days after online scammers “phished” registry accounts by releasing a computer virus. ∫ Dana Verdes
Courtesy of Romtelecom
bout EUR 15 million worth of EU carbon-dioxide permits have been stolen from the account of the Romanian branch of Holcim, the firm has announced. According to company information, about one million permits were transferred to an account in Liechtenstein and 600,000 were moved to a company that is registered in Italy and the UK. EU commission officials said that the permits had been transferred by a computer virus. “The use of a computer virus (called Nimkey) was reported. Although this virus mostly targets US banking institutions, it can potentially be used to access user’s credentials and perform the transfer of allowances,” said an EU Commission spokeswoman, quoted by Reuters. Holcim, the world’s second biggest cement maker, has asked the EU, which oversees the registration of emission credits, to help it track the stolen permits and stop them from being traded. The European Union Allowances, or EUAs, have a unique identification number, and the stolen ones are listed on Holcim’s website. The scheme caps the emissions of heavy industry like cement and steel
Holcim is missing EUR 15 mln of credits
Telecom operator RCS&RDS has applied to the National Audiovisual Council for a license to launch its Zece TV channel this month. The initial outlay will be EUR 1.18 million, with another EUR 3.5 million invested in each of the next three years, according to Mediafax newwire. Even though the channel will only be launched on December 10, RCS&RDS representatives say it will make a net profit of EUR 127,000 in December 2010. They expect Zece TV to post a turnover of EUR 2.45 million next year, according to the source. RCS&RDS is making the move in order to attract new subscribers and fight competition from UPC Romania and especially Romtelecom, which has also launched TV channels of its own, such as Dolce Sport, recently. The project manager of the new station, which will be a general channel, is Radu Morar, former anchorman and TV producer at B1 TV. Morar owns 30 percent of shares in B1 TV and is known for producing and anchoring the Nasul talk show. He has announced that he will give his shares to Bobby Paunescu, the station’s majority shareholder, in exchange for rights to the Nasul brand and team, which will move to Zece TV. ∫ Simona Bazavan, Otilia Haraga
The franchise program launched by Orange in April 2009 has required a total investment in excess of EUR 4 million. The mobile operator has now completed the program, which was conceived to help entrepreneurs on a mature market where mobile phone services have reached a penetration rate of 130 percent. Since the first franchise was launched in Pitesti in April last year, a total of 171 branches under the umbrella Orange Store have been opened in 82 locations. The network of franchise stores comprises over 500 employees who were trained through special courses. The new franchise concept includes an interactive spot in which customers can test new phones as well as mobile data services through laptops permanently connected to the internet. “We will continue to invest in this program, consolidating customer relations and expanding the range of services supplied in the Orange store network,” said Florin Popa, sales & distribution director of Orange Romania. At the moment, Orange Romania has the widest local distribution network, comprising 99 stores owned by the firm, 171 under franchise, 117 POS in partnership with retail chain Euro GSM and a further 77 POS with the Say network. ∫ Otilia Haraga
LETTER FROM THE EDITOR Introducing the new BR With this issue of Business Review we’re excited to introduce our new layout, bringing more of the best of BR into an expanded format. The redesign reflects our focus on the community, captured in the editorial coverage and series of events targeting the country communities of foreign investors. While going through these pages, you will notice our updated News pages, which now accommodate several smaller sections covering new topics of interest such as EU funding and regional developments, all designed to make our news coverage more visible and easier to navigate. The redesigned In Touch section is meant to serve as a platform for sharing opinions on the top issues of the moment, and showcase some of what BR has lined up for the week ahead. In the same community-oriented spirit, we’ve expanded our City section to include more of the events happening around town, and as well as the weekly version you can read daily online updates on Bucharest life and events in the expanded City section on the www.business-review.ro site. Last year we started the revamping of our editorial coverage with new sections – Money, Links, Power, Talent – reflecting some of the most dynamic sectors in today’s local economy, and we are now laying them out in a new format. Credit for our new look goes to Alexandru Oriean of Business Printing Solutions. To get the ball rolling, in this issue we’re focusing on 2009’s M&A activity. Even though the cash value of deals is lower than in recent years, a lot is still going on, and we wanted to see which sectors have attracted investors’ interest, where the spotlight will be, and how Romania compares with countries in the region. Please give us your views on what’s happening at Business Review by dropping us a line at editorial@business-review.ro.
Simona Fodor Editor in Chief simona.fodor@business-review.ro
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6
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TALENT 7
Business behind the scenes Every business that Liviu Stanescu has started during his entrepreneurial career has managed to become leader of its industry. But he isn’t stopping here: the young entrepreneur intends to maintain the leader position of Five’s despite the unfavorable current economic environment. ∫ ANCA IONESCU
WHO’S NEWS Mihai Mares
Has been appointed general manager of Medicover Romania as well as member of its board of directors. She has worked for local and international offices of banks such as Citibank, BNP-Dresdner Bank and ABN AMRO. She holds a master’s degree in finance from the Academy of Economic Studies and an MBA in finance and strategy from the London Business School.
Former office managing partner of Garrigues Romania, together with the firm’s team of lawyers, will join Musat & Asociatii following the Spanish company’s decision to close its Bucharest office and relocate operations to Warsaw. Mares has been managing the Garrigues office in Bucharest for the last two years. He has ten years of professional experience, with expertise in M&A, energy, infrastructure and public- private partnerships.
has been appointed president of Ford Romania and director of the Ford Factory in Craiova starting next year. He will also be responsible for relations between Ford Europe and the Ford Otosan factory. Gijsen has been with Ford for the past 30 years, holding various positions in production.
Number of employees: 40 Initial investment: USD 800 Total investment: EUR 5 million 2009 estimated turnover: EUR 2.7 million 2010 estimated turnover: EUR 2.5-2.7 million Estimated market share: 25-30 percent Organized events: Liberty Parade, Faith No More, Iron Maiden, Mariza, Redbull Flugtag, J&B Tour, Avon Tour, BMW launches, Dacia Duster tour, New Year’s Eve Constitution Square
Liviu Stanescu, general manager of Five’s if I started another business today, I would draw on my entrepreneurial spirit, intuition, courage, patience and analytical thinking,” adds the businessman. Originality and continuous challenges are the main aspects of Five’s activity. Each day is different and each problem needs a specific approach. But there is also a dark side to this business: “It is both interesting and sometimes sad that all that we build with our equipment is temporary and lasts just for the show. This is a profession where you cannot make mistakes with time, which is your major enemy,” explains Stanescu. But despite this, what remains is the happiness of the audience. “That’s why the technical team could be
perceived as an artistic one, because they work with artists in order to create emotions,” adds the general manager. Stanescu thinks that the internal structure of his company and his employees are the main elements that differentiate his business from the crowd. “The internal structure of Five’s is analogous to that of each similar European company. And this is because we are affiliated to one of the most powerful European structures in this industry, Synco Europe Network. Besides that, the most important thing in my work is my team,” adds the businessman. As for his future plans, Stanescu intends to maintain his company’s leading position and to invest in lighting and sound equipment. He also wants to develop the firm’s video department, which has so far been outsourced. “Last year Five’s didn’t decrease. On contrary, it grew because of the measures we took. We managed to maintain the same organizational structure without cutting salaries and we created an action plan that led to an increase in our number of customers and maintained our turnover at the same level as in 2009,” he concludes.
Business Review welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro
Catalina Balan
Jan Gijsen
COMPANY PROFILE Five’s
Courtesy of Five’s
Liviu Stanescu, general manager of Five’s, was always tempted to set up his own business. Despite graduating from the Polytechnic University in Bucharest back in 1993, he has never worked as an engineer. In 1992 he had both the idea and courage to establish the first restaurant specialized in international cooking, Tandoori. The Indian eatery was a top-ranking restaurant back in 1994. One year later, Stanescu decided to launch another business, the nightclub BackStage, one of the first private clubs in Romania where customers could hear live rock and blues music. “Backstage was the No.1 live music club for a long time both in Bucharest and nationwide. But it was 1996 when one of the most loyal customers of BackStage put to me a very bold project that changed my professional path: to organize a tour of ten shows across Romania. It was a great chance, especially because I got to work for BAT, one of the major multinationals in Romania,” remembers Stanescu. He adds that the idea to invest in technical equip-
ment came to his partner Sorin Danescu, and it was a natural evolution from a show-organizing company to a technical producer. “I launched Five’s firstly because I was fascinated about the world behind the stage and the whole engine that makes everything shine in front of the viewer. Plus, each event is different in essence and thus every day of my work is different and a permanent challenge,” explains the young entrepreneur. He says that he preferred to develop his business gradually rather than taking big risks. “But when your company becomes large enough in terms of cash flow and number of employees it’s impossible to continue its development with your own money,” says Stanescu. He adds: “This is why we borrowed some money from lenders to build our storage space and offices. After that we needed credit to buy new equipment. If this development could be called ‘risky’, then this is the biggest risk I have ever assumed,” adds the general manager of Five’s. And it seems that Stanescu had the right vision for his company. In early November this year, the National Council of Private Small and Medium Enterprises in Romania ranked Five’s top of a national list of private companies in Romania for 2009, awarding the company for the outstanding financial results it posted last year. This performance saw Five’s become the leading company on the corporate and musical events production market in Romania in 2009. As in previous years, the ranking was based on data provided by the Trade Register Office and Ministry of Public Finance, including the financial results posted by the company and stated in the balance sheet on December 31 last year. If Stanescu started another business he probably wouldn’t change anything, “because my way had its charm and I am nostalgic about those times. Plus I have to admit that I was lucky. But I truly believe that
Alina Damaschin is the new CEO of Rogalski Grigoriu Public Relations. She is taking over from Simona Dan, who has decided to dedicate herself to other professional projects. She has over ten years of experience in brand communication, the
last seven of which at Rogalski Grigoriu PR. She served as account director, client service director and cofounder of a digital communication agency.
Irina Albu Is joining Liebrecht & wood as leasing manager. She has over ten years of experience in real estate, specializing in the selling and renting of both residential and office projects. Irina Albu has worked at Colliers International for the past eight years, serving as senior office broker and head of the residential department. She is a graduate of the Ion Mincu Architecture and Urbanism University in Bucharest.
Codrut Pascu managing partner of Roland Berger Romania for the past five years, has been promoted to regional level. He will be responsible for the company’s operations in Turkey, Bulgaria and Romania as a member of the steering committee for Central and Eastern Europe. Pascu is a graduate of the Academy of Economic Studies in Bucharest and holds an MBA from INSEAD.
Radu Toncu is the new development director of branding agency Grapefruit. He has 16 years’ experience in marketing, trade marketing and communication and has previously worked for advertising agencies as well as larger companies and consultancy firms.
8 SPECIAL PROJECT Kazakhstan national day
www.business-review.ro Business Review | December 6 - 12, 2010
Kazakhstan promises to build investment bridge between East and West Kazakhstan’s chairmanship of the OSCE will soon draw to a close, marking the end of a year in which the country had the opportunity to present itself as an attractive emerging economy and active international investor. Coming back to Romania, Kazakh investments are largely synonymous with Rompetrol and KazMunayGas’ plans for the energy giant.
L
Courtesy of Rompetrol
The Rompetrol Group runs two refineries in Romania, Vega and Petromidia doing business in the fields of furniture, clothing and shoe manufacturing and pharmaceuticals, according to data from the Embassy of Kazakhstan to Bucharest. But predominantly, when one speaks of Kazakh investments one thinks of KazMunayGas, a company whose declared strategic objective is to join the ranks of the world’s 30 top oil and gas companies by 2015 in terms of oil reserves and production, and its acquisition of The Rompetrol Group. “This transaction makes the Republic of Kazakhstan one of the largest foreign investors to Romania and the EU with the overall sum reaching almost USD 4 billion,” said Aman, stressing that the acquisition is Kazakhstan’s first major investment project in the European Union. In the years following the acquisition, Rompetrol has turned into an active energy player in South-Eastern Europe and the Black Sea region, aiming to create an ‘energy bridge’ between Eastern resources and Western markets. So far, the numbers tell an interesting story. The group is operating in 12 countries, active primarily in refining, marketing and trading, with additional operations in exploration and production, and other oil industry services such as drilling, EPCM (engineering, procure-
ment, construction and management) and transportation. In the past three years KazMunaiGas has invested approximately USD 1.8 billion in the Rompetrol Group with an estimated USD 240 million invested by the group this year alone. KazMunaiGas continued the investment program at the Petromidia refinery, aimed at increasing the annual refining capacity to 5.3 million tons. About USD 8 billion has been generated for the state budget since 2001, USD 3.6 billion of which was raised between 2007 and 2010 alone. Last year Rompetrol posted a turnover of USD 7 billion and in the previous year USD 4.68, about 15 times more than in 2000, according to company data. The number of filling stations has also increased from only ten in 2001, to over 1,100 last year. While back in 2000 Rompetrol had 3,000 employees, this year it had 9,600, 8,000 in Romania alone. In 2008 it was the largest exporting company in Romania, with exports reaching an overall USD 1.6 billion. In the first nine months of this year, Rompetrol Rafinare’s total exports amounted to over USD 774 million, an increase of 10 percent over the same period in 2009. And the company says that investment projects will continue. “The in-
vestment made by KMG provides Rompetrol with access to raw materials and the financing necessary to continue the corporate expansion plans of our refineries, logistics and acquisitions depending on pricing and context,” said Saduokhas Meraliyev, CEO of the Rompetrol Group. In a recent interview, Meraliyev expressed his belief that Romania has the potential to become a gateway for Kazakh oil to Europe.
Courtesy of Rompetrol
ast week the summit of the Organization for Security and Cooperation in Europe (OSCE) took place in Astana, as Kazakhstan has held the organization’s chairmanship for the past year. This made the Turkic state the first Asian, predominantly Muslim country from the post-Soviet sphere to chair the OSCE. “A few weeks from now, Kazakhstan’s chairmanship of the OSCE draws to an end. In this position, Kazakhstan has focused on stringent issues regarding security and the promotion of intercultural and interreligious dialog, efforts to level down Europe’s new boundaries and finding unifying factors for countries in the OSCE’S Euro-Atlantic and Eurasian ‘region’,” Kairat Aman, charge d’affaires of Kazakhstan’s Embassy to Bucharest, told BR. Over the year Kazakhstan has striven to find viable solutions in the fight against discrimination, racism and intolerance, Aman added, saying that organizing an OSCE summit in Astana was a success in itself for the OSCE, as the organization is currently facing challenges. Kazakhstan, who will celebrate 20 years of independence on December 16, has been in the focus of international politics for the past year, presenting itself as a credible, economically strong, and democratically developing partner. Kazakhstan Day in Europe was celebrated in Brussels in October. Its time in the spotlight also offered the country an opportunity to promote itself both as a destination for foreign investments and as an important source of foreign investments in the Eurasian area. From fiscal incentives to guaranteeing investors’ rights, Kazakhstan has the necessary framework to support investment activities, said Aman. Nowadays there are 13 Kazakh-capitalized companies active in Romania with a total capital of USD 56.2 million,
Saduokhas Meraliyev CEO of the Rompetrol Group
www.business-review.ro Business Review | December 6 - 12, 2010
10 FOCUS Deals of the year
Deals of t The fields that attracted investments this year included energy, communication, retail and financial services. Yet mergers and acquisitions reached just 60 percent of the 2009 level. Specialists say that the M&A market will see a boost in 2011, but only if the gap between players’ expectations can be closed. With cash on the table – next year two funds worth EUR 25 million each financed by the European Investment Fund (EIF) will be created – it remains to be seen where investors will look for profits. Consultants are betting on energy, healthcare, food and beverages, financial services and the media. ∫ OTILIA HARAGA, DANA VERDES Energy, followed by TMT (telecom, media and technology) and financial services are the areas which lured foreign investors this year, according to Hein van Dam, partner in charge of Deloitte Financial Advisory, Balkan cluster. Radu Stoicoviciu, partner of transactions at PricewaterhouseCoopers (PwC) Romania, added, “This year, the most active sector was retail, as far as M&A are concerned. It was followed by medical services, both for the number of
transactions and their value.” “Might work” as Romanians say, considering the political and financial lack of predictability Romania has had to face this year. But while specialist views differed in terms of the field that brought foreign investors onto the local market, their opinions merge when it comes to the year’s statistics for M&A. The PwC partner said, “This year, the M&A market posted a decline in the number of transactions and volume, the latter representing approximately 60 percent of the figures posted in 2009.” Hein van Dam said that the local market looked toward consolidation rather than expansion this year, due mainly to the uncertainties over the macro-economic background. “Compared to other regional markets, Romania fares poorly both in terms of number of deals and their cumulative value,” said the Deloitte official.
Why fewer deals this year? The M&A market was impacted by the low number of attractive companies up for grabs and also by the gap between the expectations of sellers and buyers regarding the price of the transaction. Stoicoviciu said, “Next year the difference between these levels of expectation should shrink, and consequently, the M&A market will be re-invigorated.”
Hein van Dam also told Business Review, “The valuation gap between the sellers and the potential buyers remained wide, which resulted in the fewer deals concluded.” He added: “Local investors focused on the domestic consolidation of their businesses. Next year, we expect things to move towards balance-sheet optimization, with non-core asset disposals.”
M&A market forecast Energy, healthcare, food and beverage, financial services, and media are the fields the Deloitte partner expects to raise foreign investors’ interest this year. “We think that a much more substantial number of transactions will take place in the medical services domain in 2011. Retail will also remain active in M&A. We might also witness more fervent activity in telecommunications and pharma,” said Stoicoviciu. Market specialists say that one problem, so far, has been the lack of private equity financing for relatively small amounts, with funds focusing on investing in companies that had the capacity to absorb large funds. “An important step was the formation of the venture capital fund raised by Enterprise Investors, and next year two funds
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Deals of the year FOCUS 11
the year financed by the JEREMIE program of the European Investment Fund (EIF) will be created. The funds – which will be worth EUR 25 million each – will be able to make small investments, of up to EUR 1.5 million per year in each company,” said Irina Anghel, general secretary of the South Eastern Europe Private Equity Association (SEEPEA).
Who’s looking to buy? Specialists say that it is mainly local players and individuals and private equity entities who are prospecting the local market for M&A opportunities. “Private equity funds have substantial capital to deploy. Transactions are taking longer to craft and I would argue it’s less about money and more about the quality of opportunities, greater analysis of potential risk-reward and the concerns related to the macroeconomic context,” said Hein van Dam.
FMCG Kraft Foods sells Romanian business to Oryxa Capital Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: DLA Piper US food giant Kraft Foods announced the sale of the Cadbury-owned Kandia-Excelent chocolate and cake business in Romania to Oryxa Capital investment fund. Cadbury acquired the Romanian sweet maker in 2007, but Kraft was forced to divest of it under EU competition rules following its contentious takeover of the UK confectionery giant in February this year. The sale includes Kandia-Excelent brands (Rom, Magura, Kandia, Laura, Sugus and Silvana and others), related trademarks and the manufacturing facility in Bucharest. The US company did not disclose the financial details of the deal but said that it would retain the global Cadbury brands, including Halls cough sweets.
Sorin Minea becomes majority shareholder of Angst Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Sorin Minea, a Romanian entrepreneur on the butchery market, t o o k
“ There are especially financial investors of the private equity type who have funds available and are ready to invest in Romania, if the companies on sale are attractive enough and the owners have reasonable price expectations,” added the PwC partner. Romania's economy is not developed enough to attract funds specialized in specific sectors, say experts. Romania and the region are home to mainly generalist funds, which study the overall market and invest in companies with growth potential regardless of the sector. “Most likely, the forthcoming acquisitions will continue to be well known companies, leaders in their segment, which generate stable and predictable results and do not have a high level of debt,” said Anghel. She added: “In the long term, five to ten years, Romania has the potential to become an important driver of growth and investment funds are waiting for this. Our members have more than EUR 4 billion under management and they will continue to invest in the region.” The following pages cover the main moves on the local M&A market over the past year, with transactions broken down by sector.
Where information is listed as unavailable, it was not available to BR by press time.
over 60 percent of the stake held in Angst by his Swiss partner, Urs Angst. This makes Minea majority shareholder of the company – initially he held 15 percent – with over EUR 50 million in turnover and a 22-store chain. Minea did not reveal the value of the transaction, but says the company’s assets were put at around EUR 20-22 million last year, whilst the value of investments made by the Angst family in the meat producer amounts to around EUR 10 million.
P&G sells Wella Romania to Interbrands Value of transaction: confidential Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: In-house lawyers FMCG giant Procter & Gamble (P&G) offloaded its local division of professional products designed for hair salons, selling Wella Romania to Interbrands. Wella is the biggest player on its market segment, products created exclusively for distribution in hair salons. Interbrands, which has been distributing P&G products for 17 years, thus takes over the distribution of hair dye, shampoos and other Wella hair care products, System Professional and Londa Professional to around 3,000 hair salons. The company had EUR 12 million
www.business-review.ro Business Review | December 6 - 12, 2010
12 FOCUS Deals of the year
DEALS in numbers
75
million and a profit of EUR 1.2 million last year.
La Fantana purchases Rokor Ecostyle Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable
in sales in 2008 and 70 employees. Interbrands entered the Romanian market in 1993, and handles the distribution operations of Cadbury, Nestle and Henkel.
La Fantana acquired Rokor Ecostyle and reached a market share of over 80 percent, becoming leader on the segment of water purification systems. The value of the transaction was unavailable but when the deal was signed, the enterprise value of Rokor Ecostyle was EUR 4.35 million. Following the move, Rokor Ecostyle will run under the same brand as a dedicated division for the water purification segment of La Fantana. The firm has 600 employees in Romania and Serbia. It has two bottling units in Romania and one in Serbia. In Romania, La Fantana has 25,000 corporate clients and institutions.
Caroli merges with Campofrio
Julius Meinl buys back Kandia
Value of transaction: unavailable Legal team Campofrio: NNDKP Legal team seller: unavailable
Value of transaction: confidential Legal team buyer: unavailable Legal team seller: unavailable
Caroli Foods Group and Campofrio Food Group signed a merger contract establishing a joint venture with operations in Romania and Bulgaria, the Republic of Moldova, Serbia, Ukraine and Turkey. The newly merged entity was to be named Caroli Foods Group. The combined turnover of the two companies is in excess of EUR 120 million and together they control a market share of over 16 percent. Romania will remain the main outlet market of Caroli Foods Group, but the new joint venture also intends to develop its presence in SEE. Caroli Foods Group will hold 51 percent of the new company’s stake and Campofrio Food Group will control the other 49 percent.
The Austrian family Meinl, owner of the Julius Meinl coffee brand, took over EUR 1.5 million of losses when it acquired chocolate producer Kandia. Kandia-Excelent reported a EUR 33.4 million turnover last year and a negative result of EUR 1.5 million. In its three years in the hands of British Cadbury, Kandia did not manage to turn a profit, reporting cumulated losses of almost EUR 8 million from 2007-2009. Last year’s financial results in terms of losses were similar to those of 2007, the year when Julius Meinl sold Kandia-Excelent to Cadbury for EUR 100 million.
Bongrain buys Delaco
Value of transaction: EUR 7 million Legal team buyer: in-house lawyers Legal team seller: Tuca Zbarcea & Asociati
million euro represents the sum Asesoft will pay Realitatea Catavencu over the next five years for the management of the media outlet
Value of transaction: unavailable Legal team buyer: Biris Goran Legal team seller: unavailable French dairy producer Bongrain took over the majority stake in Romanian dairy producer Delaco, formerly controlled by local businessman Tudor Comaniciu. Prior the deal, Delaco Distribution's shareholders were Tudor Comaniciu, (a 56.16 percent stake), Dragos Comaniciu (a 28 percent stake), AdrianVictor Vartolomei (14.08 percent) and Romulus Dumitru (1.75 percent). Delaco was set up by Romanian investor Tudor Comaniciu in 1996 as a family business. Financial details were unavailable . Bongrain, which sells the Apetito and Caprice de Dieux brands in Romania, is currently consolidating its business in Central and Eastern Europe.
Alka Pro sells Nutline to Intersnack Group Value of transaction: over EUR 10 mln (media estimations) Legal team buyer: unavailable Legal team seller: Musat&Asociatii Intersnack acquired Nutline from its rival company, Alka Grup. Nutline was created by Israeli businessman Amir Krenzia, the owner of Alka Group, and it had a share of 38 percent last year on the market of seeds and dry fruit that was estimated at EUR 50-70 million. The Nutline division posted a turnover of EUR 22
Noriel Group sells minority stake to Axxess Capital
Balkan investment management company Axxess Capital purchased a minority stake in Noriel Group, a leading producer of popular games and toys in Romania. The investment was made via the Balkan Accession Fund, which is managed by Axxess. The deal gave Balkan Accession Fund a 40 percent stake in Noriel through the purchase of both existing shares and newly issued shares. This paved the way for Noriel to expand retail operations outside the local area and the country, with hopes of making it a major player in the Balkan region.
Sofiproteol/Saipol buys Romanian Expur Value of transaction: estimated at EUR 80 million Legal team buyer: in-house lawyers Legal team seller: Tuca Zbarcea & Asociatii, Cotty Vivant Marchisio & Lauzeral French company Sofiproteol acquired Romanian vegetable oil producer Expur Urziceni, controlled by the Swiss group Alimenta. The acquisition was completed via the Saipol subsidiary of Sofiproteol. The European Bank for Reconstruction and Development granted EUR 80 million to Expur in November to achieve its development plans by introducing new products on the market. EUR 60 million
of this sum will be used for purchasing seeds. In 2009, Expur posted a turnover of EUR 86 million.
MEDIA Publicis Groupe buys Publicis Romania, Focus Advertising and Publicis Events Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Publicis Groupe announced the acquisition of three of its long-term affiliates – Publicis Romania, Focus Advertising and Publicis Events – in a move to strengthen its presence in the Balkan region. The three entities were to operate under an integrated communications agency to be named Grupul Publicis Communications Services Bucharest. The agency was to become part of the Publicis Worldwide global network. Teddy C. Dumitrescu, the agency’s founder and CEO, was to continue to lead the agency as CEO and report to Tomasz Pawlikowski, CEO Publicis CEE and Russia. Grupul Publicis Communications Services Bucharest offers advertising, branding, strategy, creative, production, sales promotions, event marketing and digital services. Founded in 1994, the agency has been a partner of Publicis Worldwide since 1995. ‘This deal completes our Balkan expansion. We’ve had close links with the agency and its strong management team for ten years and it’s great to finally get married,” said Richard Pinder, COO of Publicis Worldwide.
Bobby Paunescu buys Evenimentul Zilei and Capital Value of transaction: EUR 4-8 million (market sources) Legal team buyer: unavailable Legal team seller: unavailable Evenimentul Zilei and Capital, publications in the Swiss Ringier portfolio, were bought by businessman Bobby Paunescu. He additionally owns B1TV, VOX News and local paper Gazeta de Sud. The value of the transaction was unavailable , but sources estimate it at EUR 4-8 million. Both publications have seen their results fall in recent years. The Evenimentul Zilei newspaper business made between EUR 4-5 million in 2009, while Capital reported EUR 1.5-2 million. In 2007, the revenues of the two publications were almost double, and the final result was positive. Ringier Romania still has in its portfolio publications such as tabloid Libertatea, TV Mania, Unica, Bolero, Bravo and Lumea Femeilor.
Asesoft takes over Realitatea Catavencu management Value of transaction: EUR 75 million over next five years Legal team buyer: unavailable Legal team seller: unavailable Sebastian Ghita, owner of local IT&C group Asesoft, became the new manager of Realitatea Catavencu media group, pouring an estimated five-year investment of EUR 75 million into the company. The takeover was aimed to help the media group make the necessary efforts to adopt HD technology. Sorin Ovidiu Vantu will remain a shareholder in the company.
TELECOM Romtelecom acquires New Com Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Romtelecom completed the acquisition of New Com Telecomunicatii. The value of the deal and number of subscribers that Romtelecom gained were not made public. However, an independent report carried out by Euroval in October 2009 evaluated the five New Com networks at 26,000 clients and USD 9 million. The transaction was made through NextGen Communications, a telecom provider that is fully owned by Romtelecom. In March 2009, New Com sold 30,000 customers to NextGen Communications. Several months later, it sold another 30,000 clients to RCS&RDS in a transaction that was estimated at the time to be worth EUR 5 million. New Com Telecomunicatii was founded in 2007 in Cluj. The shareholders of the company were investment firm Capital Partners and two other investment funds.
GTS buys Datek Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable
GED buys Infopress Group
Telecom player GTS Central Europe acquired the Romanian firm Datek, marking the completion of a contract signed in December. GTS CE will add Datek to its existing Romanian operations, creating a combined business with total annual revenues exceeding EUR 25 million. The move puts GTS in the top three alternative telecom operators on the local market. Last year, GTS posted a turnover of EUR 19.8 million and an EBITDA of EUR 5.2 million. The takeover will see it double its number of employees. Currently Datek has a staff of 106 while GTS employs 115 people in Romania.
Value of transaction: EUR 12 million Legal team buyer: Vilau & Mitel Legal team seller: Biris Goran
INSURANCE
Spanish private equity firm GED bought 92 percent of the share capital of Infopress Group. Founded in 1990 as the publisher of Odorheiu Secuiesc newspaper, Infopress has grown steadily into the largest printing company in Romania and SouthEast Europe and among the leaders in Eastern Europe. GED also owns in Romania travel agency Happy Tour, telecom store chain Fonomat, medical equipment provider Diamedix, Eurobusiness (as co-owner) and security services company Rosegur Holding.
AXA picks up Omniasig Life Value of transaction: under EUR 10 million (media estimate) Legal team buyer: unavailable Legal team seller: unavailable With the takeover of Omniasig Life, AXA entered the Romanian life insurance market, in line with its objective of accelerating the development of its activities in emerging countries, notably in Central and Eastern Europe. AXA took over a major share package in Omniasig
www.business-review.ro Business Review | December 6 - 12, 2010
Deals of the year FOCUS 13
CEE DEALS IN FIGURES
in the deal. Only eight were selected for the preliminary stage, two of which were shortlisted. Investment fund 3TS Capital Partners, which was previously the second largest shareholder within the firm, along with the company founder, Wargha Enayati, exited from the deal. 3TS used to hold 39 percent of the shares in CMU, with Enayati holding the rest. The CMU founder gave up his major shareholder position, with Advent now owning the majority stake in CMU.
INDUSTRY Carabulea sells 34.5 percent in Bricomat and majority stake in Transcom Value of transaction: RON 9.55 million Legal team buyer: unavailable Legal team seller: unavailable
The mergers & acquisition market recorded important volumes in sectors such as industrial and chemicals, TMT (telecom, media and technology), consumer and pharma, medical and biotech sectors. Source: Mergermarket Life, which had up to that point been owned by Vienna Insurance Group. After the transaction, the company became AXA Life Insurance and all the operations were to be coordinated under the AXA umbrella.
Eugen Voicu buys back Aviva Investors Value of transaction: unavailable Legal team buyer: Tuca Zbarcea& Asociatii Legal team seller: unavailable Three years after selling Aviva Investors (Certinvest at that time) to British group Aviva, Eugen Voicu, the company’s CEO and founder, bought back his majority stake. Voicu said that directly or indirectly he would have 99.9 percent of the company. The asset management company rebranded as Certinvest in order to mark the change but will continue its partnership with Aviva. Voicu founded Certinvest in 1994 and sold it in December 2007 for a value which was kept confidential at that time but was estimated at around EUR 3 million. Throughout this time he has served as the company’s CEO, a position he will continue to hold.
HEALTHCARE Medlife gets Brasov Medical Center Value of transaction: over EUR 3 million Legal team buyer: Popovici Nitu and Asociatii Legal team seller: Vernon, David and Asociatii Local medical services provider MedLife acquired 80 percent of Policlinica de Diagnostic Rapid SRL in Brasov in a transaction that totaled in excess of EUR 3 million. The medical center in Brasov was rebranded as MedLife – PDR following the deal. It includes a clinic, two medical laboratories and has about 200 medical employees. MedLife-PDR has just started construction works for a hospital and clinic in Brasov. The hospital will have a capacity of 75 beds and will comprise five levels. MedLife has so far invested more
than EUR 2.5 million in the hospital.
Centrul Medical Unirea buys Euroclinic Value of transaction: unavailable Legal team buyer: RTPR Allen&Overy Legal team seller: Kinstellar Centrul Medical Unirea (CMU) acquired Euroclinic Hospital and Euroclinic Medical Centers from insurer Eureko. Eureko Asigurari has approximately 8,000 insured clients who will have access to the medical facilities of the new group. The two parties agreed not to disclose the value of the transaction. This year, the two companies will have a cumulated turnover of EUR 30 million. Euroclinic will keep its name. Currently, Euroclinic runs a hospital and three medical centers, and has 350 employees. Last year, it posted revenues of EUR 8 million.
Fresenius acquires dialysis centers in Deva and Satu Mare Value of transaction: up to EUR 5 million per center (media estimate) Legal team buyer: unavailable Legal team seller: unavailable Fresenius NephroCare Romania acquired two dialysis centers, one in Deva and one in Satu Mare. Even though Fresenius did not disclose which particular centers it bought, media information referred to two of the Nefromed centers as Fresenius was in the list of shareholders of Nefromed SM and Nefromed HD. The shareholder of Nefromed Dialysis Centers is Lokxen Trading Limited registered in Cyprus. These takeovers are part of Fresenius NephroCare’s expansion strategy. Fresenius posted a turnover of EUR 23.8 million last year.
Advent obtains majority stake in CMU Value of transaction: EUR 40 million Legal team buyer: unavailable Legal team seller: unavailable Investment fund Advent International bought an 80 percent stake in private medical services supplier Centrul Medical Unirea. In total, 12 firms were interested
Romanian businessman Ilie Carabulea sold a 34.5 percent stake in Bricomat Sibiu on Rasdaq for RON 8.5 million and the majority stake in Transcom Sibiu for RON 1.05 million. Bricomat is 97.47 percent controlled by Ilie Carabulea, who directly holds an 84.46 percent stake, and through Atlassib with 13 percent. The stock of road transport company, Transcom, was transferred in a 62.43 percent package.
Mechel buys Laminorul Braila Value of transaction: EUR 9.4 million Legal team buyer: unavailable Legal team seller: unavailable Russian mining and steel company Mechel acquired 100 percent of the shares in Donau Commodities, which holds 90.91 percent of Romanian steel plant Laminorul Braila. The acquisition value is estimated at EUR 9.4 million. This is the only plant in Romania manufacturing the special profile (bulb bar) which is used in shipbuilding. In 2009 the plant manufactured more than 50 thousand tons of structural shapes, delivered mainly to Western and Eastern Europe. The acquisition of Laminorul Braila will allow Mechel to significantly extend its product range and achieve synergy with its other Romanian subsidiaries, namely, Mechel Targoviste, Mechel Campia Turzii, Ductil Steel Buzau and Otelu Rosu, which are specialized in the production of longs and hardware.
RePower buys 80 percent of shares in Elcomex Value of transaction: EUR 15 million Legal team buyer: Musat&Asociatii Legal team seller: unavailable Swiss company Repower bought an 80 percent stake in Romanian electricity distribution company Elcomex EN. Elcomex posted revenues in excess of EUR 70 million in 2009 and before the deal, it was totally controlled by businessman Ion Grecu. The acquisition agreement stipulates that Repower will purchase the remaining 20 percent stake in the company. Following this takeover, Repower would supply electricity to clients in the SME segment. Repower’s main shareholders are Swiss canton Graubunden, with 46 percent of the shares, Alpiq Holding with 24.6 percent of the shares and EGL AG with 21.4 percent of shares.
STUDY Allen&Overy: M&A activity in CEE on the rise The volume and number of major M&A transactions has risen in Central and Eastern Europe in the first three quarters of 2010 compared to 2009, says the Allen&Overy M&A Index. According to the report, there are still significant differences between the expectations of sellers and buyers, which makes recovery in the M&A sector difficult in certain sectors and regions. The cumulated value of CEE transactions was over USD 50 billion in the first 3Q of 2010. Activity was generated in the past year and a half especially from selling non-core assets or assets located in non-core regions of companies. Deals came from three main areas: privatizations, telecommunications and takeovers of family businesses. According to the report, M&A activity in Romania was focused on transactions under USD 100 million, especially in retail, pharmaceuticals, and medical services. In Hungary, Romania and Ukraine, M&A activity is shaped by currency difficulties and problems in obtaining bank finances. In this context local companies are looking to get their financing from the capital markets or attract mezzanine investors. One part of the region where M&A activity has picked up since the second quarter of 2010 is Russia. This reflects the recovery in the price of oil and the Russian economy. The most active sectors were oil and gas, energy and utilities, and manufacturing. Foreign strategic investors are driving activity here, particularly Chinese and Indian energy companies, along with Russian firms looking to consolidate their market share, the report found. Privatizations in Poland and the declared strategy of the government there have been a significant source of activity in the region, and Polish M&A have reached a new level of complexity. Deals made there involve the consideration of public M&A. In the Czech and Slovak Republics, budget deficits are driving sales of government assets, the report adds, with intense activity going on in the energy and utilities sector, which has seen privatizations, significant asset swaps and a lot of activity around renewables. Romania stands out with smaller deals in the pharma and healthcare sectors. One sector that has been more prominent is TMT. The consumer and food and beverage sectors have also been active, having seen large regional private equity houses divesting assets purchased in 2005 and 2006. The telecom sector is expected to produce further large disposals of non-core assets, according to the report.
www.business-review.ro Business Review | December 6 - 12, 2010
14 FOCUS Deals of the year
DEALS in numbers
90 million euro, the sum paid by the Rompetrol Group for the majority stake in Rompetrol Rafinare
ButanGas buys Romconstruct Top Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable ButanGas Romania, part of liquefied petroleum gas company ButanGas Grup, bought a 90 share package in Romconstruct Top, a firm specialized in electricity production, in June. The remaining 10 percent is controlled by Emanuel Muntmark, a wind farm developer. Romconstruct Top – based in Constanta – reported a EUR 1.3 million turnover in 2009, and has 10 employees, according to Finance Ministry information. ButanGas Romania’s main shareholder is ButanGas SPA, with 93 percent, while Propangas AG controls a 7 percent stake.
Rompetrol Grup buys Rompetrol Rafinare Deal Value: EUR 90 million Legal adviser to buyer: Musat & Asociatii Legal team seller: unavailable Rompetrol Group has increased its stake to 98.61 percent of the share capital of Rompetrol (RRC), after it attracted takeover offer 5.38 percent. Rompetrol will pay 85.31 million lei for the subscribed shares in the offer, but the total amount to increase its share from 75.99 percent to 98.61 percent is EUR 88.06 million.
AUTOMOTIVE New Kopel buys Ipso-Renault dealership Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Israeli group New Kopel bought the Dacia-Renault dealer IPSO Otopeni in the first half of this year. New Kopel turned the dealership into an Opel center, through Union Motors Car Sales firm. The company manages a total area of 4,000 sqm which includes a showroom, deals with service and spare parts and has 100 employees. The overall investment in the new center reached over EUR 6 million, company officials said. The Opel network currently includes 42 sites nationally, 40 percent of sales being made in Bucharest.
Leoni takes over AEES Power Systems’ Romanian plant in Beius Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: Musat & Asociatii Leoni, the leading provider of cables and cable systems, acquired the AEES Power Systems Group plant in Beius, situated in north-western Romania. AEES Power Systems Group is specialized in the design, development and production of electrical and electronic distribution systems for cars. The additional business volume reaches a single-digit million Euro total per year, according to Leoni officials. The plant was acquired as AEES Power Systems restructured its European operations in early 2010. In connection with the restructuring, Leoni continued to supply cable harnesses for batteries and chassis to two truck manufacturers.
Kromberg & Schubert takes over a factory in Nadab Deal value: unavailable Legal team buyer: unavailable Legal adviser to seller: Musat & Asociatii Cable manufacturers Leoni, Kromberg & Schubert and Sews took over three local
factories of the American factory Alcoa, located in Nadab (Arad), Caransebes (Caras Severin) and Beius (Bihor). The total value of the business that Alcoa had in Romania was of EUR 30 million and almost 5,000 employees estimated in 2008. Platinum Equity investment fund sold the three factory previously owned by Alcoa, with all the means and employees included. The largest factory, located in Nadab, was then taken over by German components manufacturer, Kromberg & Schubert.
SEWS takes over a factory in Caransebes Deal value: unavailable Legal team buyer: unavailable Legal adviser to seller: Musat & Asociatii Cable manufacturers Leoni, Kromberg & Schubert and Sews took over three local factories of the American factory Alcoa, located in Nadab (Arad), Caransebes (Caras Severin) and Beius (Bihor). The total value of the business that Alcoa had in Romania was of EUR 30 million and almost 5,000 employees estimated in 2008. Platinum Equity investment fund sold the three factories previously owned by Alcoa, with all the means and employees included.
RETAIL Mercadia Holland buys MiniMAX Discount Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Mercadia Holland BV took over the full shareholding of miniMax Discount, the discount retail network operator, as part of the group’s development strategy on this market. The value of the transaction was unavailable , but market estimates placed it at a few million euro. The previous owners of miniMax Discount were Austrian group Real4You, together with Rainer Exel, who runs the company, and Andreas Kampf, active on the sales segment. Mercadia Holland BV – controlled by businessman Dinu Patriciu – owns the majority share packages in Mic.ro Retail, Bet Cafe Arena and iLearn.
Lidl buys competitor Plus in Romania and Bulgaria Value of transaction: estimated EUR 80 million Legal team buyer: Norr Stiefenhofer Lutz Legal team seller: unavailable
Courtesy of Rompetrol
Oil company Rompetrol is part owned by the Romanian state
German discount supermarket chain Lidl, which entered the Romanian market in 2003, bought the local low-cost chain Plus from German owner Tengelmann. Lidl took over the entire Plus business in Romania and Bulgaria, including all employees. Plus entered the Romanian market in 2005 and has opened 96 stores throughout the country so far. Two more shops in Rosiorii de Vede and Husi will be up and running soon, according to the retailer. Each Plus store covers 1,500 sqm, out of which 1,200 sqm represents sales area. Lidl is part of the German Lidl & Schwartz Group, which already runs Kaufland stores in Romania. The company previ-
ously said it was planning to open its first stores in Romania in 2010 but has not yet done so.
IKEA Group buys local franchise from group of investors in SEE expansion bid Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Swedish retailer and furniture producer IKEA Group acquired its local franchise from a group of investors. The local franchise had been running an IKEA store for the last three years. It was held by Moaro Trading, which sold the store’s operating rights and franchise. Moaro Trading had obtained the franchise rights from Inter IKEA Systems BV, the global IKEA franchiser. The acquisition was in line with IKEA Group’s future expansion plans in South Eastern Europe. The group includes all IKEA operations: the Swedwood industrial group, distribution and warehousing divisions and the companies that own stores in countries around the globe. IKEA has 301 shops in 37 countries, of which 268 belong to the IKEA Group, the franchise holder. The remaining stores are owned and run by other franchisees. Moaro Trading, which opened the first IKEA store in Romania in 2007 after a EUR 10 million investment, was controlled by Dutch consortia Engma, Turkmall and Inter IKEA Systems. The local media named Romanian investor Gabriel Popoviciu as the main investor in the Swedish furniture firm’s business in Romania. Popoviciu has invested in the Baneasa real estate project in north Bucharest, which includes the IKEA store in its retail area.
EDUCATION Tender buys majority stake in Codecs Value of transaction: EUR 424,747 Legal team buyer: unavailable Legal team seller: unavailable Romanian businessman Ovidiu Tender, who controls operations worth over EUR 200 million, bought a majority stake (51 percent) in training and consultancy firm Codecs for around EUR 425,000. The firm currently has a EUR 2.7 million Eximbank loan to repay, of which EUR 1.5 million is outstanding. Tender bought the majority stake to have a professional formation unit for all his employees and for the real estate aspect of the deal. Codecs owns two office buildings in central Bucharest. Tender’s most important businesses are the steam generator Vulcan Bucuresti and geological explorations company Prospectiuni. Codecs, which was formed in 1993, currently manages a training division, typography business, a foundation and an MBA program and has 25 shareholders.
TRANSPORT Recordati Group buys ArtMed Value of transaction: EUR 1.2 million Financial adviser: Capital Mind Legal team buyer: unavailable Legal team seller: unavailable Pharmaceutical group Recordati Group acquired ArtMed International, a phar-
www.business-review.ro Business Review | December 6 - 12, 2010
maceutical products promotion company in Romania, along with the rights to the products currently being promoted by the firm. The price was EUR 1.2 million plus an earn-out based on the gross profit of the five products under license. ArtMed was established in 2005 as a provider of specialized marketing services for companies such as Bristol-Myers Squibb and Pfizer. The company employs 30 people and will operate as a development platform for Recordati in Romania.
Quehenberger enters Romania by acquiring Longwin Road & Rail Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Austrian transport and logistics company Quehenberger took over Longwin Road & Rail activities, through a transaction that involved the acquisition of operations in Austria and Eastern Europe. The company operates three logistics centers in Romania, in Bucharest, Timisoara, Arad and Pitesti. Its client portfolio includes the car-parts producers Lear Corporation, Delphi Packard, Honeywell and companies in the consumer goods industry, such as Red Bull and Tchibo. Over the past year the company recorded a business volume of EUR 8 million and an operating profit of EUR 200,000.
Dumagas Transport sells a significant stake to Bancroft private equity fund Value of transaction: unavailable Lead corporate finance adviser to the seller: The Counsel Legal team buyer: Cameron McKenna Legal team seller: Wolf Theiss The founding shareholders of Dumagas Transport, a leading Romanian road transportation company in Romania, sold a majority stake in their company to Bancroft, a Central and Eastern European, mid-market, private equity fund manager. The transaction was completed in July 2010. Dumagas Transport engages in general and specialized transportation and holds a prominent position in controlled temperature warehousing and logistics. The involvement of Bancroft will allow Dumagas to continue developing the company’s activities across all its business lines, consolidate the group’s positions in key export markets and speed up the development of the controlled temperature warehousing and logistics markets.
LEASING Banca Transilvania buys Medicredit Leasing Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable
of the Banca Transilvania Group, a provider of integrated financial services including banking, insurance, leasing, realty, consumer financing, factoring and business administration.
Enterprise Investors buys major stake in Netrisk.hu
DISTRIBUTION
Polish Enterprise Fund VI (PEF VI), a private equity fund administered by Enterprise Investors, acquired a major stake in Netrisk.hu, the largest online broker of general insurance. Following the transaction, Enterprise Investors (EI) committed to expand Netrisk.hu in Hungary, Romania and Central and Eastern Europe. Netrisk.hu was founded 15 years ago and deals in CTP, CASCO, home and travel insurance. Currently, it has 770,000 users. In November 2009, EI fully bought out Profi Rom Food Group, one of the largest supermarket chains in Romania, in a EUR 66 million deal that involved a management buyin team.
Montero sells Tamisa Trading Value of transaction: EUR 200.000 Legal team buyer: unavailable Legal team seller: unavailable Montero, a Romanian drug distributor, sold its subsidiary, Tamisa Trading, for EUR 200,000. Shares in the subsidiary were bought by the two managers of Montero responsible for pharmacy distribution. The sale followed Montero’s insolvency, which was declared in February this year. Along with the insolvency declaration, the court was to have approved Montero’s reorganization plan, which was aimed at recovering its operations and paying off its debts over the next two years. Tamisa Trading was acquired by Montero in 2007. The subsidiary generated revenues of EUR 15.9 million and made a loss of EUR 900,000 in 2008.
ONLINE Sanoma Hearst buys MagazinulDeCase.ro Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Sanoma Digital Romania, a sister company of Sanoma Hearst Romania focused on digital media, acquired MagazinulDeCase.ro, Romania's first “for sale by owner” real estate market place. MagazinulDeCase.ro has a reputation as the most efficient real estate website in Romania, guaranteeing the highest average number of views per listing. The market place has intermediated over 4,800 real estate transactions. MagazinulDeCase.ro continues to increase its number of new listings, although the real estate market in Romania is currently in decline. With this transaction Sanoma took the next step towards its objective of becoming a leading digital media company in Romania in addition to its prime position in consumer magazines.
Value of transaction: EUR 23 million Legal team buyer: unavailable Legal team seller: unavailable
PROPERTY IKEA investment fund buys EUR 35 million land in Timpuri Noi platform Value of transaction: estimated EUR 34.6 million Legal team buyer: Voicu Filipescu Legal team seller: unavailable Interprime Properties investment fund, part of the Swedish group IKEA, acquired the Timpuri Noi factory platform in Bucharest for EUR 34.6 million. The property consists of 51,000 sqm. The Romanian company had been trying to sell the platform since 2007, when it asked about EUR 100 million, without VAT, for the land. Interprime Properties is 9.99 percent controlled by Romprop Holding company, registered in the Netherlands, where it has the same address as Vastint Holding, owned by Inter IKEA Group, developer and operator of IKEA stores in Europe and China.
Shopping Center Holding buys Oradea Tiago Mall Value of transaction: EUR 30.5 million Legal team buyer: unavailable Legal team seller: unavailable
DEALS in numbers
35 million euro payd IKEA investment found to buy Timpuri Noi platform Tiago Mall in Oradea, which filed for bankruptcy in May, was sold for EUR 30.5 million to a firm whose headquarters are the same as Baneasa Investments’ location. The asking price was EUR 35.5 million. The auction was organized by the Transylvania House of Insolvency and the project developer’s liquidator, MLS Project Oradea, subsidiary of Mivan, the Irish Group. The original investment for Tiago Mall was EUR 65 million, credit obtained from UniCredit Austria and UniCredit Tiriac Bank. The project was won by Shopping Center at a price of EUR 30.5 million, plus VAT,” Vasile Pop, the liquidator’s representative, told media. Shopping Center Holding is 90 percent held by the Cypriot firm Karias Trading Limited, while Ciocoiu Dumitru owns the rest, according to the Trade Register’s National Office. Tiago Mall filed for insolvency even before it was finished. The mall market in Romania was becoming over-saturated with such shopping destinations and, consequentially, malls in Sibiu and Braila had to be closed due to the lack of tenants and clients, say insiders. However, Tiago Mall is the first mall to have filed for insolvency.
NEPI buys Floreasca Business Park Value of transaction: EUR 27.6 million; buyer assumes EUR 73.6 million bank debt Legal team buyer: Reff&Asociatii Legal team seller: NNDKP New Europe Property Investments (NEPI) bought the Floreasca Business Park for
GED gets hands on Paravion.ro Value of transaction: unavailable Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: Sfiraiala & Asociatii GED acquired Paravion.ro, the leading online travel service provider in Romania, from travel company Millenium Tour. The acquisition took place through GEDowned company Happy Tour. Paravion.ro had eight employees. It posted a turnover of EUR 5 million and estimated EUR 7 million for this year. The move was part of GED’s strategy in the tourism sector, started in December 2007 with the acquisition of Happy Tour. The strategy includes the consolidation of its position as a leading travel services provider in Romania, both offline and online, allowing GED to extend operations to other Eastern Europe countries.
Photo: Laurentiu Obae
Banca Transilvania (BT) became sole shareholder of Medicredit Leasing IFN – a company in which it held 38.89 percent – following the acquisition and subscription of stock in the leasing company, which specializes in medical equipment. Banca Transilvania’s stake in Medicredit Leasing IFN consists of 13,191 nominal shares with a face value of over RON 1.3 million, which is fully subscribed. Banca Transilvania is the main member
Deals of the year FOCUS 15
Furniture giant IKEA bought back its own franchise
www.business-review.ro Business Review | December 6 - 12, 2010
16 FOCUS Deals of the year
Lufkin buys 33 hectares in Ploiesti West Park Value of transaction: estimated EUR 6.6 million Legal team buyer: Salans Legal team seller: unavailable Texan company Lufkin Industries bought a 33-hectare plot in Ploiesti West Park on which to build its USD 126 million plant. The firm provides equipment and services for the oil industry. Ploiesti West Park is owned by businessman Petrica Usurelu, owner of Piritex group, and Belgian group Alinso. The value of the transaction was unavailable but the sale price for industrial land in the area stands at EUR 2022 per sqm.
CONSTRUCTION Egeria and Wagram Equity Partners take over Den Braven Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Dutch polyurethane foams and adhesives producer Den Braven was taken over by two Dutch investment funds, Egeria in partnership with Wagram, which acquired its majority share package. The new shareholders made public their intention to increase production capacity by investing in the local Den Braven foam plant, one of the group’s eleven such plants and the only one located in Eastern Europe. The investments are estimated to double the turnover of the Romanian subsidiary over the next three years, according to company representatives. “The takeover of the Den Braven group by two financial giants like Egeria and Wagram with extremely sound financial resources is a guarantee for the future development of the group and, of course, of its local business,” said Adrian State, GM of Den Braven Romania. He added that the move would not cause personnel changes, nor would it affect the company’s existing business relations. Den Braven Romania posted a 40 percent sales increase for the first half of 2010 against the same period of last year, reaching EUR 16.3 million. The firm opened a representative office in Romania in 1997, and in 2007 decided to invest over EUR 12 million in a local polyurethane foam plant, the group’s only one in Eastern Europe.
Courtesy of Herberger x
EUR 27.6 million. With this transaction, NEPI also assumed the EUR 73.6 million bank debt of Floreasca Business Park. The deal was made through the acquisition of Ingen Europe BV, the owner of Floreasca Business Park, from Apollo Rom US, Apollo Rom EU, Kanebo Investments and Grimsby Investments. The EUR 27.6 million purchase price was to be funded through the proceeds of a rights offer on the London Stock Exchange. NEPI says the acquisition came at a moment when the Bucharest office market offered value for investors. The property is an Aclass office building located on one of Bucharest’s main boulevards with access to a subway station and other means of public transport. It has three levels of underground parking space and a total rentable area of 36,032 sqm. The average rental price in the building is EUR 17.21 per sqm, with the valuation of the property standing at EUR 99.8 million.
NEPI bought Floreasca Business Park as property prices plunged
IT&C ABC Data purchases major stake in Scop Computers Value of transaction: unavailable Legal team buyer: unavailable Legal team seller: unavailable Polish company ABC Data acquired at the end of November a major stake in retailer Scop Computers. For now, ABC Data has acquired 51 percent of the shares, but the contract stipulates that within three years it will become the only shareholder in the company. ABC Data signed a contract with Mokito Management Limited, minority shareholder, and will take over the rest of the shares from the latter by 2013. ABC Data is listed on the Warsaw Stock Exchange. Scop Computers was founded in 1994 and currently has 130 employees and a distribution network of more than 1,000 partners. Last year, Scop Computers posted a turnover of EUR 80 million.
Asesoft buys Flanco Value of transaction: EUR 14 million Legal team buyer: KPMG Romania Legal team seller: Casa de Insolventa Transilvania Asesoft took over the major share package of IT&C retailer Flanco after it emerged from insolvency. The new major shareholders of Flanco are shareholders in Asesoft, Iulian Stanciu and Sebastian Ghita. Asesoft Web entered as major shareholders in Flanco, purchasing 60 percent of the shares. The other 40 percent stake belongs to the three banks to which Flanco owed money: Unicredit, BRD and ING. The two shareholders announced they would inject new capital of EUR 4 million. Also, the banks would receive EUR 10 million, a sum specified in the reorganization plan.
Naspers buys GECAD e-Payment Value of transaction: unavailable Legal team buyer: Marian Dinu Law Office, part of DLA Piper Legal team seller: CMS Cameron Mc Kenna SCA Allegro, part of Naspers Ltd, became the major shareholder in GECAD ePayment. The transaction was completed in August
but the two companies did not disclose its value. Allegro acquired 83 percent of the shares of GECAD ePayment. The remaining shareholder is Orbitview, which has 17 percent of the company. Radu Georgescu remains part of the management board of the company but the new CEO is Daniel Nicolescu. Before the acquisition, the Avangate division of GECAD ePayment, an international supplier of solutions and services for electronic software distribution, became a separate entity.
Provus obtains Romcard Value of transaction: unavailable Legal team buyer: Badea Clifford Chance Legal team seller: Reff & Associate BCR, BRD, UniCredit Tiriac Bank, Raiffeisen Bank and Financiara, as shareholders of RomCard, announced the successful sale of their 100 percent stake to Provus Services Provider. Following the transaction, Provus manages over 1,500 ATMs, 4,500 POS terminals, 2.8 million cards and 3.5 million transactions per month. RomCard was set up in 1994 as the first card-processing center in Romania. It began to operate as an interbank processing center for the five Romanian banks which were also its shareholders: BCR, Bancorex, BRD, the Agriculture Bank and Ion Tiriac Bank. Starting 2000, due to changes in the banking field, the shareholder structure of RomCard became the one above.
TOURISM GED acquires Travel House Value of transaction: unavailable Legal team buyer: Tuca Zbarcea & Asociatii Legal team seller: Biris Goran Shortly after closing the deal for Paravion.ro, GED revealed that it had acquired an 80 percent stake in Travel House. The travel agency posted sales of EUR 6 million and a net profit of EUR 110,000 in 2009. It was controlled by Luca Zucchetti, Stefano Bardi and Corina Souvannasouck, and the latter remained minority shareholder and joined the group as executive manager. GED carried out the transaction equally through Happy Tour, which GED had previously taken over in December 2007.
www.business-review.ro Business Review | December 6 - 12, 2010
18 FASHION
RETAILER PROFILES Jolidon an estimated 85 stores in Romania over 40 abroad (France, Italy, Hungary) I.D. Sarieri 5 stores in Romania over 250 commercial centers in the world, including New York, Paris and Taipei Musette 12 stores in Romania 4 abroad (2 in Bulgaria, 1 in Israel and US) Irina Shrotter 7 stores in Romania 1 in Switzerland
Specialists give lowdown on Romanian brands’ foreign mission
Photo: Laurentiu Obae
Today Romania, tomorrow the world: local fashion brands are trying their luck on foreign markets
Local fashion brands mount foreign assault ID Sarrieri, Musette and Jolidon are all aiming to make a name for themselves abroad. Musette has reached New York, ID Sarrieri is already on sale in over 25 countries, and Jolidon was one of the first Romanian brands to be counterfeited abroad. ∫ CORINA DUMIITRESCU Luxury nightwear and underwear maker ID Sarrieri was launched in 1992 by Iulia Dobrin as a brand keenly focused on the foreign market. Its merchandise is now present in over 25 countries and is known to have been worn by the likes of Nicole Kidman, Julianne Moore, Britney Spears, Cameron Diaz, Charlize Theron, Halle Berry and Cindy Crawford. An estimated 90 percent of income (according to media reports) is believed to come from beyond Romanian borders, in some 250 commercial centers. Back home the firm has only five stores, three in Bucharest, and one each in Cluj and Brasov. A recent forecast from Cpp Luxury Industry Management Consultants predicts that the high-end market in Romania will grow in 2011, with the entrance of
three major luxury players in Romania, through mono-brand stores, Gucci, Armani and Burberry. As a result, Cpp managing director Oliver Petcu expects the luxury market in Romania to register a 40 percent increase. However, it seems that local brands are hankering after the already mature markets abroad. Textile manufacturer Jolidon specializes in lingerie and swimwear, and is now a famous name on the Romanian market, where it was started by Gabriel Carlig in Cluj, in 1993, and has since grown to reach around 3,000 employees in 2009. Jolidon reportedly registered a EUR 24.2 million turnover in 2009, solely in Romania, a 12.5 percent decrease compared to 2008. At the end of 2009, the number of local stores fell from 90 to 85 in Romania. Now, as Olga Stanciu, deputy director at Jolidon, has told the press, the company is reliant on exports. 2010 was supposed to be the year in which the textile industry was to make a comeback – 2011 reports will show if this was so. In 2009, the firm from Cluj extended its business to Ireland and Finland and secured clients in Dubai, Saudi Arabia, Qatar and South Korea, which added to its estimated 35 stores in Italy, two in Hungary and ten in France, show media reports. In 2006, Jolidon reportedly became the first Romanian brand counterfeited abroad, when Chinese lingerie bearing the Jolidon label began popping up around the world, a development which, although flattering, led to losses.
Musette sells luxury shoes and bags under the exclusive CristhelenB brand, the design of which is done in Italy. The business, owned by Cristina and Roberto Batlan, is estimated to be worth around EUR 6 million, after seeing a 20 percent yearly growth rate in the past four years. The brand has 12 stores in its home country, which, owner Cristina Batlan told media, are sufficient for “an oversaturated market” and has therefore decided to extend onto larger markets. In August, Musette products became available in Soho, Manhattan, in a franchise store, with its shoes and bags retailing at USD 100 to 350, according to the US press. For 2011 and beyond, Batlan told the press, she is preparing the opening of stores in Germany, Israel, Hungary and Austria. The brand’s current strategy is to sell its products under the franchise system to many firms interested in its products. Another big name in fashion, Irina Schrotter is a well-known local designer, who founded her first fashion house in 1990 and who currently owns a creative workshop, three clothes factories and eight stores bearing her name. The designer sells her trademark clothing in Canada, America, Brazil, England, France, Italy, Denmark, Russia, Ukraine, Greece, Japan, Saudi Arabia, Kuwait, Lebanon and now Switzerland, where the designer recently opened her first international store. Media reports indicate that the brand seems to be registering results above expectations, but it is too early to draw reliable conclusions.
As all of the above brands rank themselves or some of their product ranges as “luxurious”, BR asked specialists on the high-end market in Romania for their take. “The market for luxury goods is a highly competitive, marketing intensive, very volatile niche one. Current and midterm domestic demand in Romania is not sufficient to feed the necessary growth in this market. The key challenge for such a strategy will be to avoid a copy-paste of successful results in one market onto another. What works in Romania might not work somewhere else and vice versa,” warns consultant Michael Weiss of AT Kearney. More importantly, it seems that Romanians interested in luxury products have acquired the habit of going on their shopping sprees across Europe rather than buying from local stores. Petcu expanded on the importance of history and tradition in the categorization of upmarket brands. “In Romania, these three brands are positioned as premium brands, as they are present in most general malls, at a relatively accessible price. The reasons why they cannot be ranked as luxury are their lack of history (heritage), relatively low level of creativity and innovation (none of these brands is recognized as creative), while the great majority are produced automatically (with the aid of machines),” explained Petcu. He cited the example of the lingerie firm. “ID Sarrieri has an international level of fame, the result of effective PR campaigns (global celebrities wearing the brand’s products have constantly appeared in international fashion magazines), as well as an effective sales strategy that has managed to position the brand in some of the world’s top department stores.” Petcu said that in Romania, luxury products are in high demand, yet the local products in this category currently lack the creativity and heritage of the top international brands, and still suffer due to a somewhat unexplained “hostility to local products”. To achieve success abroad, Romanian firms need to work a little harder. Weiss adds: “New brands from Italy and France have the advantage that they can benefit from the decades of intensive marketing of these countries. Compared to this, a new label from Romania needs to invest significantly more to drum up similar awareness.” corina.dumitrescu@business-review.ro
www.business-review.ro Business Review | December 6 - 12, 2010
PROPERTY 19
Victoria City Center gets construction permits CD Capital Partners and Benevo Capital Corporation have received the construction permits for the Victoria City Center development. CD Capital Partners and Benevo are developing the center through a joint venture. Demolition works on the site have already started and construction is scheduled to start in 2011. The planned delivery date is in spring 2013.
Courtesy of Victoria City
The first phase will comprise a 60,000sqm GLA shopping center and entertainment facilities with more than 200 retail shops and restaurants and an eight-screen cinema. Approximately 1,800 parking places will be available both underground and on the roof levels. It will be developed on a five-hectare site on Bucurestii Noi Boulevard, on the former Dacia textile factory
Victoria City Center is scheduled to open in spring 2013
site. The total development cost of the first phase will be approximately EUR150 million. Designed by retail architects Altoon & Porter, Victoria City Center will be linked to the newly built Pajura metro site through a direct connection. The Pajura metro station is expected to be operational by fall of next year. Anchors tenants secured so far include a 10,500 square meter Cora hypermarket and an eight- screen Cinema City cinema. “We had put the project on hold for 2 years and now that the market is improving, including positive GDP forecasted growth for 2011 and growing requests from tenants, we have started demolition and will begin construction in the fall of 2011. Victoria City Center, will be a dominant first rate 60,000 GLA shopping and entertainment complex at the heart of North West Bucharest. Victoria City Center will be the only shopping and entertainment complex with a metro station located directly on the site,� said Michael Topolinski, president and CEO of Benovo Capital Corporation. The project has been financed to date by Alpha Bank.
www.business-review.ro Business Review | December 6 - 12, 2010
20 CITY RESTAURANT REVIEW
Utterly unimpressed
Photo: Laurentiu Obae
Pipe dream: it might have the trappings but Chez Toni falls short on authenticity
Chez Toni, Str Glodeni, at Pescariu Tennis Club 021 242 0204 MICHAEL BARCLAY
mab.media@dnt.ro
In the early 90s there was a huge appetite on the Bucharest restaurant scene for anything exotic and Lebanese cuisine was no exception. Time has passed since then and over the years the menus have been upgraded and Bucharesters’’ palates have became a little bit more sophisticated. One thing remained unchanged, the appetite for Lebanese cuisine, and the variety of restaurants from which to choose stands as proof of this. Here are some of the options available in Bucharest if you are craving some. El Bacha Address: 6 Alba Iulia Square; 75 Constantin Sandu Aldea St; 11 Drumul Bisericii St Phone: 021 269 1392, 021 319 2439, 021 316 4770 elbacha.ro@gmail.ro Four Seasons Address: 81 Vasile Lascar Street Phone: 021 212 2992, 0722 216666 fourseasons_lebanese@yahoo.com Piccolo Mondo Address: 9 Clucerului Road (behind 1 Mai Square) Phone: 021 222 5755, 021 223 2225, 0722 205020 restaurant@piccolomondo.ro Restaurant Beirut Address: 3A Nicolae Racota Street Phone: 021 222 0169, 0722 302320 Restaurant Tripoli Address: 10 Hagiului St Phone: 021 326 6042 tripoli@tripoli.ro Restaurant Tulin Address: 2 Pictor Constantin Stahi Street Phone: 021 314 4001, 0762 212675 rezervari@restauranttulin.ro Chez Toni Restaurant Address: 3 Glodeni Street Phone: 021 242 0204, 0740 007878 office@cheztoni.ro Decano Restaurant Address: 8 Vasile Milea Boulevard Phone: 021 410 4079, 0724 270550 Restaurant Aisha Lebanese Address : 26 Putul lui Zamfir Street Phone: 021 230 4181 rezervari@aishafood1.ro
Photo: Laurentiu Obae
Lebanese cuisine could be, and should be, fabulous. But not in this city. I can draw an analogy with Bucharest’s Italian chophouses, all of which have the same, boring trattoria menu. Identical in every restaurant, it is a tourist menu which uses Romanian local supplies and then adds Italian names to each dish. I am sorry to say that the same applies to the numerous Lebanese restaurants here. When I say numerous, I mean there are the same number of them as there are phony Irish bars. And that is a lot. So I went to the new Chez Toni hoping for something different from the rest, but no! It was the same old menu that every other Lebanese restaurant offers. So let’s look at what a Lebanese restaurant should offer you (but you will not get in this town). Just look at a map of the Mediterranean. You will see that Greece, Turkey and Lebanon are all neighbors sharing the same climate, the same fish, the same choice of meat and the same vegetables. The Greeks are lazy when it comes to gastronomy, so they bake a couple of lamb shoulder dishes as traditional cui-
sine and then BBQ a bit of fish and a few skewers of lamb on a grill. The Turks are a tiny bit more adventurous, but treat their meat and fish in a similar fashion. They have far better bread than the Greeks and are more adventurous with their vegetables. But when it comes to Lebanon, it is so very different. Lebanese history makes it the most dynamic cuisine in the Middle East. With a thousand-year history of tolerance for all races and religions in the name of trade and commerce, they have imported both spices and cultures from all over the world. So let your imagination wander around a genuine Lebanese restaurant to which you are welcomed with a table laid with a bowl of fresh raw vegetables from around the world for you to chew on as you peruse a menu offering you Toum (Arabic aioli with crushed garlic, salt and olive oil), Mahab flavored dishes (an aromatic spice made from cherry seeds), meat flavored with anise, cinnamon and even coconut, meat and rice stuffed zucchini, M’amoul (pastries stuffed with dates or pistachios), Ka’ak (sweetbread rolls with sesame seeds, Pastirma (pastrami) olives, snails, whole roasted birds… oh what is the point in me continuing to tease you. Because YOU ARE NOT GOING TO GET THIS in this House, or any other Lebanese restaurant in Romania. What you will get is any dish that can
be made from ingredients purchased from Bucharest’s Billa, Carrefour or Metro. This House is both lazy and greedy. In a nutshell: they base almost everything on locally supplied parsley, lemon, garlic, yoghurt, eggplant and packaged nuts. Middle Eastern cuisine? Oh give me a break! If you want an example of local produce, look at their soup menu. They have: vegetable, vegetable and beef, chicken and lentil. Is there any Romanian housewife in the land who does not make those soups daily? Have I made my point? No, well if not just look at their fish menu with grilled Dorada, Octopus, Prawns and Perch. Does that sound familiar to you? Have you ever been to a Romanian chophouse which does not have them on the menu? And as for their local Romanian meat: well they had the usual suspects of beef, lamb and chicken kebabs. Basically this means cubes of meat impaled on an iron skewer and grilled over a charcoal fire. No, not here. They must have used an electric grill because there was no charcoal sensation whatsoever. Worse still, the House knows full well that a kebab dish must be accompanied by a portion of gorgeous ‘Turkish rice’ (there was none of it), red cabbage (none of that either), red onion (two mean slices) and coal grilled tomato (it was raw). For this aberration we were charged a whopping RON 45 – for three skewers of mixed grill meat on one plate. Outrageous. They are so mean that they even charge you for the most basic staple of Lebanese cuisine: pita bread. I have eaten my way across Lebanon for half my adult life and never have I been so insulted as to be charged for bread. It should come steaming hot, free of charge and in literally unlimited quantities. But not here. Shame on you House! Astonishingly, with the House knowing that all Lebanese dishes must have the option of a side of fresh lemon and olive oil, there was none on my table (nor were there any olives) so I had to ask for them. They were simply taking the piss out of their customers who did not know these simple rules. Well they do now! To look at their Lebanese offerings, yes, again they had trawled the local supermarkets (local means Bucharest, not Beirut) and produced Baba Ghannouj (smoked eggplant with garlic, onion and peppers), a variation on another standard Romanian dish. There was of course Hummus, Tabouleh (parsley salad), and Foul Mudammas (fava beans with garlic and lemon). Take note that all of those three dishes can be purchased off the shelf in Mega Image at a fraction of the price charged at Chez Toni. They had other tourist dishes which were too boring to mention. Was it genuine Lebanese food? Yes, but it was a selected menu to optimize Romanian supermarket products rather than to give you the magic of creative Lebanese cuisine. To achieve that, you have to go to the capital city of Lebanon, which is of course London!
RESTAURANTS IN BUCHAREST Lebanese Cuisine
Leban-easy does it: El Bacha restaurant
www.business-review.ro Business Review | December 6 - 12, 2010
CITY 21
FILM REVIEW
Red-faced: this action flick is way below the talents of Bruce Willis, Morgan Freeman and John Malkovich
Red
∫ DEBBIE STOWE Directed by: Robert Schwentke Cast: Bruce Willis, Morgan Freeman, John Malkovich, Helen Mirren On at: Cinema City Cotroceni, Cinema City Sun Plaza, Cityplex, Corso, Glendale Studio, Hollywood Multiplex, Movieplex Cinema Helen Mirren. John Malkovich. Morgan Freeman. Bruce Willis. (Okay, maybe Bruce’s thespian caliber falls a little short of the others, but when there is simultaneous ass-kicking, wise-cracking and white vest-sporting to be done, he is peerless.) With a cast of this quality, you’d probably buy your ticket for Red on the strength of those names alone. Caveat
emptor! The top-class talent is wasted on this mess of a movie, part silly action, part lame-brained comedy, with a romantic subplot shoehorned in for the hell of it. Lest the title suggest that Willis is a tough-guy communist, single-handedly taking on the evil forces of capitalism (an unlikely piece of casting), be informed that Red is an acronym for ridiculous empty-headed drivel – sorry, retired, extremely dangerous. And retirement can be a challenge, especially when you used to bust bad guys for a living. Erstwhile CIA black-ops spook Frank Moses (Willis) finds himself sitting at home in suburbia, passing the time by flirting on the phone with a secretary at his pension firm. Life is pretty quiet, until a hit squad blasts Frank’s house to bits in a bid to kill him. Clearly somebody wants Frank out of the picture. So he assembles a team of fellow CIA pensioners: elegant, posh Brit Helen Mirren, calm elder statesman Morgan Freeman and conspiracy theorist John Malkovich. A lot of playing against type
going on then. Brian Cox, as a Cold War uber-Russian (replete with sinister Soviet music when he first appears), rounds out the gang. Bruce’s pension secretary, Mary-Louise Parker, is dragged along, as he is worried their cringe-worthily flirtatious phone calls might have put her in danger. Our plucky band then lurches from one set-piece shootout to the next, occasionally pausing to make weak gags. The movie is based on a comic, which tells you all you need to know about its subtlety, depth and characterization. One has to wonder what made these Hollywood heavyweights sign up for Red. Were they made promises about the scripting and direction that weren’t kept? Does director Robert Schwentke have compromising photos of them doing unspeakable things? Whatever it was, sign up they did, and it is their presence that lends the film a veneer of watchability that it doesn’t really deserve, elevating it from throw-your-popcorn-at-the-screen bad to sort of entertaining if you’ve got
nothing better to do. Willis is in John McClane mode, giving his iconic character a run out in advance of Die Hard 5 (yes, it’s coming), minus the dirty white vest and the sweary catchphrase. Mirren in evening dress behind a machine gun is certainly worth a look. Freeman and Malkovich don’t do much that they haven’t done in about a dozen previous films (wise counselor and ranting maniac respectively) but it’s still good to see. Ernest Borgnine also pops up in a cameo. Aside from the stellar cast, there is a kind of brainless panache to much of the action and a few surprise plot twists that shake things up. But this does not excuse the waste of A-list acting ability assembled, nor does it make Red any more than a mid-ranking action flick. And let’s face it, the competition – Knight and Day, The Expendables, Salt – is not exactly going to trouble the Oscar committee. editorial@business-review.ro
www.business-review.ro Business Review | December 6 - 12, 2010
22 IN TOUCH
CABLE of the week Romania – a ‘feral nation’ Former European commissioner for international relations Chris Patten called Romania a “feral nation” in 2004, according to cables released by WikiLeaks and published by The Daily Mail. Patten’s comments came as he was discussing Bulgaria and Romania joining the European Union. They were recorded and sent to the US by its embassy in Brussels. The cable read: “Croatia, Patten said, is probably far more prepared for EU membership than either Bulgaria or Romania, who will likely enter the union earlier. Romania, in particular, was a ‘feral nation’.”
FROM OUR READERS Talking point Why is Romania on the rocks?
Dana Verdes Senior Journalist is working on a round up of the wind energy projects on the local market this year and future developments in this area. Players hope that this rapidly developing field will bring profits during a booming period for the energy field.
Edwin T Perhaps a starting point, especially when considering the image of Romania from overseas, would be to discuss how Romania might change its electoral system to enable strong governments with the power to push through their legislative agendas without continual votes of confidence in the government of the day by the opposition. From an outsider’s point of view it appears that political stability has never been achieved since 1989. How can any investor have confidence in the security of its investment if the government of the day is likely to be brought down at any second by petty personal differences in the political parties? The same politicians deride each other at a personal level daily in the collective media.
Steve B I have been traveling throughout Romania recently and – as I have to ask for receipts – have noticed a huge increase in “off the books” transactions (it certainly wasn’t 100 percent compliance before the crisis or VAT increase but it has REALLY degraded fast). People selling products in the streets or without offering a receipt in their stores are not just not contributing to government coffers but, of course, able to undercut those businesses that are trying to comply. I don’t want to debate the merits of a VAT tax or if this is the IMF’s fault, etc, but if you are going to collect it, the government can’t keep turning a blind eye to those evading it. On the other hand, it is a matter of survival for some who could not exist if they remitted 24
percent of the purchase cost. As someone who started a business here, I can only say it has been a real struggle to pay my fair share of very high employment and other taxes. High school economics dictates the tax rate should be lowered and enforcement increased unless Romania is trying to develop a core competency of a nation forced to “find another way around”. I came here to do interesting things and develop a responsible business, not to become a tax cheat – and will vote with my feet if necessary.
11:00 American Chamber of Commerce in Romania (AmCham Romania) organizes a press conference to discuss plans for 2011 at Athenee Palace Hilton Hotel. By invitation only.
17:30 ∫EVENT Business Review organizes the Foreign Investors’ Forum, bringing together all the investors that have been part of each Country Focus event so far. Topics for discussion include labor and employment issues, energy investments, agriculture and tourism. The event will take place at JW Marriott Grand Hotel. For registration and more information, please visit: business-review.ro/events/
dana.verdes@business-review.ro
Simona Bazavan Journalist is writing an article on the local cosmetics market and how Romanian manufacturers have attempted to iron out the wrinkles of the crisishit market. Many of them have moved into the area of retailers’ own brands, a growing market niche during the economic crisis. simona.bazavan@business-review.ro
Romanian brands survive capitalist transition through reinvention Ken Huegel Thanks for noting “reactive patriotism”. If our definitions are the same, it is the mentality of “I can complain about my country, but woe if you complain about my country!” I’m reminded of the woman who mentions she thinks she is fat. Dare you agree? Would you survive? Exactly the same...
EVENTS, BUSINESS & POLITICAL AGENDA December 7 11:00 RBS Romania organizes an event for the opening of its new headquarters in Lakeview Building. By invitation only.
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December 8 10:00 Google Romania organizes a press meeting with its CEO, Dan Bulucea, at InterContinental. By invitation only.
Corina Dumitrescu Journalist is reviewing corporate philanthropy and NGOs. As company budgets come under ever more pressure, how has this type of discretionary spending been hit and what strategies are NGOs employing to ensure the cash keeps coming? corina.dumitrescu@business-review.ro
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December 8 16:00 Oriflame Romania organizes an event to celebrate 15 years of activity in Romania at Media Pro studios. By invitation only.
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FOUNDING EDITOR Bill Avery
EXECUTIVE DIRECTOR George Moise
EDITOR-IN-CHIEF Simona Fodor
SALES & EVENTS DIRECTOR Oana Molodoi
SENIOR JOURNALISTS Otilia Haraga, Dana Verdes
ISSN No. 1453 - 729X
MARKETING MANAGER Adina Milea
JOURNALISTS Simona Bazavan, Corina Dumitrescu
SALES & EVENTS Ana-Maria Nedelcu, Claudia Munteanu
COPY EDITOR Debbie Stowe
SUBSCRIPTION Lili Voineag
PHOTOGRAPHER Laurentiu Obae
PRODUCTION Dan Mitroi
LAYOUT Beatrice Gheorghiu
DISTRIBUTION Eugen Musat
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