Target Information

La Cocos, founded in 2014, is a Romanian discount retailer currently operating three locations in the urban areas of Ploiesti and Bucharest. The company has adopted a unique business model that focuses on providing a streamlined selection of products at highly competitive prices. With an impressive annual sales growth rate of 24% from 2018 to 2022, La Cocos has outperformed many larger competitors within Romania's grocery retail sector. In 2023, the retailer achieved revenues totaling 200 million euros, offering customers approximately 10,000 SKUs within a single shopping environment.

La Cocos serves both individual consumers (B2C) and small businesses (B2B), featuring a carefully selected assortment of essential consumer products, including well-known brands. The company's strategy is based on maintaining low operational costs and providing an efficient shopping experience, enabling it to offer prices that are lower than those of its competitors. The store network is distinguished by its straightforward, 'no-frills' approach, strategically located in peripheral areas to optimize operational efficiency.

Industry Overview in Romania

The grocery retail sector in Romania is experiencing robust growth, with discount retailers emerging as a particularly dynamic segment. The increasing consumer preference for affordability and value has stimulated the expansion of discount formats across the market. With rising competition among established players, new entrants like La Cocos are successfully leveraging their unique business models and strong operational efficiencies to capture market share.

As Romania's economy continues to grow, the food retail market is expected to further evolve, driven by urbanization and changing consumer behaviors. The demand for convenient shopping options is leading to the emergence of modern retail formats that meet diverse consumer needs. This trend creates significant opportunities for innovative retailers like La Cocos to scale their operations and enhance their presence in the market.

Furthermore, the Romanian government has implemented supportive policies aimed at fostering development in the retail sector. Investments in infrastructure and logistics are improving accessibility to markets and enhancing supply chain efficiencies, which present further opportunities for discount retailers. As the sector continues to mature, the outlook remains optimistic for players focused on delivering value and operational excellence.

Rationale Behind the Deal

This strategic partnership involves the European Bank for Reconstruction and Development (EBRD), CEECAT Capital, and Morphosis Capital Fund II acquiring a majority stake in La Cocos. The aim is to bolster the rapid expansion of the La Cocos brand throughout Romania. The founders of La Cocos, Iulian and Gianina Nica, emphasized that the transaction provides access to essential financial resources and expertise necessary for achieving their ambitious growth goals, which include opening multiple new locations over the next four years.

The collaboration will not only help La Cocos solidify its leadership position in the local grocery sector but also accelerate its journey towards becoming a national champion in food retail. The partners' combined strengths and experiences will facilitate effective scaling of the La Cocos network.

Investor Information

The European Bank for Reconstruction and Development (EBRD) is a notable multilateral institution that fosters private sector development across 36 economies in three continents. With a strong historical investment track record in Romania, contributing over €11 billion across 547 projects, EBRD is keen on supporting innovative retail business models within promising markets like Romania.

CEECAT Capital, established in 2005, focuses on investing in small and mid-market companies in Central and Eastern Europe and Turkey. Its commitment to socially responsible growth promotes sustainable governance and community engagement within its portfolio companies. Morphosis Capital, founded by a group of Romanian entrepreneurs in 2018, specializes in transforming local SMEs into regional leaders, primarily through growth capital investments.

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This partnership represents a significant opportunity for La Cocos, marking a prudent investment in a rapidly growing sector. The food retail industry in Romania is primed for expansion, especially within the discount segment. The backing from experienced investors like EBRD, CEECAT Capital, and Morphosis Capital will provide vital resources that can elevate La Cocos into a stronger competitive position nationally and regionally.

Given La Cocos's proven growth trajectory and robust business model, the potential returns on investment appear promising. The investment landscape is favorable, with increasing demand for discount retailing as consumers continue to seek value in their shopping experiences. In this context, the ambitious expansion plans outlined by La Cocos are both timely and strategically sound.

The alignment of visions among the consortium partners, along with their comprehensive expertise in scaling retail operations, further enhances the likelihood of success for this venture. As such, the investment in La Cocos can be viewed as a calculated move that capitalizes on a burgeoning market trend, thereby supporting long-term sustainable growth.

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