Target Company Overview

AMC V SCA SICAV-RAIF, advised by Accession Capital Partners (ACP), has entered into a partnership with INVENIO Partners, a private equity firm focused on Southeast Europe, to acquire a majority stake in 5 to go, the most prominent coffee shop chain in Southeast Europe. This stakeholder acquisition comes from existing shareholders, which include Mozaik Management and the founders. Notably, the founders will maintain a significant minority stake and continue to play a vital role in the company's operational and daily management.

5 to go currently operates 600 locations across its key markets. The recent financial investment will primarily support the company’s international expansion in Southeast Europe and in other regions with substantial Romanian communities, aiming to leverage the brand's strong recognition. Furthermore, the investment will enhance the brand's existing footprint in Romania, where franchisees operate in over 130 cities.

Industry Overview

The Southeast European coffee shop industry has experienced significant growth over the last few years, driven by increasing consumer demand for high-quality coffee experiences and a growing café culture. In Romania, in particular, the influence of Western café trends has played a vital role in shaping consumer preferences, leading to a surge in coffee shop openings and innovative business models.

The rise of coffee chains in the region has also contributed to employment opportunities and economic growth, with many companies, such as 5 to go, embracing franchise models to facilitate rapid expansion. Given the region's unique blend of local tastes and international café trends, businesses are positioned to capture a diverse customer base, providing a competitive advantage in establishing brand loyalty.

Moreover, the COVID-19 pandemic accelerated changes in consumer behavior, with more individuals choosing to socialize in café settings post-lockdown. This trend has prompted coffee shop chains to adapt their strategies, including enhancing their digital presence and offering unique customer experiences to ensure relevance and sustainability.

The future of the coffee shop sector in Southeast Europe appears promising, with continued investment expected to drive innovation and expansion. Established chains like 5 to go are well-positioned to lead the charge, capitalizing on their brand strength and market familiarity to capture a larger market share.

Rationale Behind the Deal

The decision to acquire a majority stake in 5 to go aligns with broader commercial strategies focused on growth and expansion. Invoking a shared vision among ACP, INVENIO Partners, and 5 to go, this partnership aims to leverage the existing franchise model to accelerate international expansion while enhancing operational efficiency and brand presence.

Investors see 5 to go's potential for scalability and profitability in new markets, particularly with the company's established reputation and proven operational model. The investment represents a strategic move to capitalize on the burgeoning coffee shop market in Southeast Europe while fostering a strong brand identity that resonates with consumers.

Investor Profile

Accession Capital Partners (ACP) is leveraging its fifth fund, AMC V SCA SICAV-RAIF, which successfully closed at €336 million in June 2024. Established in 2000, ACP has built a robust presence across Central and Eastern Europe, with operations in key cities such as Vienna, Warsaw, Bucharest, Budapest, and Prague. The firm has raised over €1.2 billion through five dedicated growth capital funds, supported by reputed institutional investors including the European Investment Fund and the International Finance Corporation.

INVENIO Partners manages two funds focused on growth equity investments in Southeast Europe, including the INVENIO Partners Fund II SCSP. The firm emphasizes strategic guidance and operational support, helping companies realize their growth potential. With a keen eye for companies poised for regional leadership, INVENIO Partners has attracted backing from esteemed institutional investors, enhancing its capability to promote company success.

View of Dealert

The partnership between ACP and INVENIO Partners for the acquisition of 5 to go represents a significant opportunity for both parties. The growing coffee shop sector in Southeast Europe, particularly in Romania, presents an enticing market for investment, given evolving consumer trends favoring higher-quality café experiences. This deal could enhance 5 to go's footprint and capitalize on its established brand recognition.

From an investment perspective, the involvement of seasoned investors like ACP and INVENIO Partners adds credibility to the venture, suggesting a well-researched approach to market expansion. Their expertise in managing growth capital investments positions them to effectively navigate the challenges of scaling operations across new markets.

However, potential risks include encountering regulatory hurdles in expanding internationally and the need to continually adapt to varying consumer tastes. Nonetheless, if these challenges are managed effectively, the investment could yield significant returns, establishing 5 to go as a leader in the European coffee chain market.

In conclusion, this joint acquisition marks not only a promising venture for the investors but also a strategic move to enhance the presence of 5 to go in a dynamically evolving industry. If executed well, it has the potential to serve as a benchmark for future private equity investments in the region.

View Original Article