www.avallon.pl

Lodz based private equity fund specializing in management buy-out/buy-in transactions – has realized another investment with managers acquiring 100% of shares in CEKO Sp. z o.o. – a producer of cheese.AVALLON purchased the shares from the Company’s founders in partnership with an external management group. This is one of the first MBI (Management Buy-In) transactions realized with a financial partner in Poland.

CEKO launched its operations in the 1990’s. Initially, production in Goliszów covered only Dutch types of cheese (Edam, Lowicz). In recent years the range of products has been extended with Swiss cheese, low-fat, Italian, and smoked cheese. Currently CEKO produces thirty different varieties of cheese, both for individual customers and for the HoReCa market. In 2011 CEKO generated net sales of PLN 78 million. Constantly increasing revenues prove that we are witnessing changes in the eating habits of Poles - more and more the traditional country ham is replaced with nutritious cheese.

Dariusz Zielinski, CEO of CEKO Sp. z o.o.: There comes a point in every manager's life where they would like to apply the skills acquired in the management in their own company. A chance for the implementation of such dreams is the realization of a management buy-out/buy-in. However, for this to come true, it is necessary to simultaneously meet at least three conditions: a company’s shares for sale, an experienced management team, and a friendly investor who will support the buy-out. The MBO/MBI market in Poland is developing slowly, because often owners, who intend to sell a company, do not consider the possibility of selling it to managers. In addition, it is not easy to find a suitable capital partner. In our case, the project began with establishing cooperation with AVALLON with whom we shared the idea of a potential management buy-in transaction. In return, the Fund presented us with a project in which we could cooperate together. This is the origin of the investment in CEKO – probably one of the first MBI projects in Poland.

Vendor
From the Vendors’ perspective it is very important who will lead the company after the transaction, how the sales process will be performed and how it will affect the future growth of the Company. Therefore, the selection of the fund and the management group was extremely important to us. AVALLON created a partner relationship during the sales process and provided the Company with experienced managers. Such a combination of highly skilled managers and capital back-up will certainly help to achieve CEKO's plans which were outlined before the sale.

Michal Zawisza, Vice President of AVALLON Sp. z o.o.:
Analyzing the food industry we observed the potential for growth in the functional food segment. With this in mind, we started the search for companies which have an attractive portfolio of high quality, unique products that would offer us an entry into this growing market and build value. CEKO met these parameters. But in order to accomplish this transaction, we had to find managers who would manage the Company after the purchase, since the owners exercised management functions. Finding experienced managers was a challenge, but a necessary condition for the transaction. Happily we managed to complete the transaction and have now finalized one of the first investment fund supported MBI transactions in Poland. At the time of the investment, the Fund also assured the continuity of operational funding executed by the Office of Structured Finance, Corporate Banking Department BGZ.

About AVALLON: AVALLON MBO Fund is a private equity fund established in 2007 with EUR 50 million under management and is the only fund in Poland specializing in management buy-out/buy-in transactions. The Fund’s investors are global financial institutions (e.g. European Bank for Reconstruction and Development, financial institutions in Switzerland, Scandinavia). AVALLON is managed by local partners with long experience in Private Equity, investment banking and M&A.

The Fund’s investment policy focuses on following criteria:
1. Expected average time of investment - form 3 to 5 years;
2. Equity Investment - up to EUR 7 million increased by a prudent use of bank/mezzanine leverage and our Investors’ complimentary funding;
3. Investments in Poland and CEE region;
4. Lack of industry focus; 5. Direct investments or through SPV.

Until now AVALLON has invested in 7 portfolio companies including Grupa Kapitałowa Medort S.A. (market leader in distribution of prosthetic and orthopedic products), Fiten S.A. (electric energy production and trade on Polish and European markets), Good Food S.A. (manufacturer and distributor of health food products including rice cakes), Organic Farma Zdrowia S.A. (Poland’s biggest retailer and wholesaler of bio-food), AG Foods Group a. s. (producer and distributor of instant beverage solutions), Eko-Vimar Orlański Sp. z o.o. (manufacturer of ecologically fuelled heating boilers), Limito Sp. z o.o. SKA (distributor and processor of Norwegian salmon and other fish and seafood products). CEKO Sp. z o.o. is the most recent investment. www.avallon.pl


Additional Information:
Dariusz Zielinski
CEO Investment Director CEKO
Goliszew 3a
62-817 Zelazków
d.zielinski@ceko.pl

Marcin Konarski
AVALLON Kosciuszki 17
90-418 Lodz
m.konarski@avallon.pl

Press Office:
Joanna Wisniewska
Tel. (+4842) 630 97 71, Tel: +48-603 896 484
E-mail: j.wisniewska@avallon.pl