Information on the Target

Profi Rom Food is the largest supermarket chain in Romania, boasting an extensive network that reaches nearly 250 urban, suburban, and rural locations. In 2010, Enterprise Investors acquired a 100% stake in Profi for €66 million and subsequently invested an additional €10 million to support a comprehensive modernization and reorganization program. This investment positioned Profi as one of the most dynamic retail networks in Romania, resulting in the opening of over 100 new stores in the past two years alone. Today, the total number of stores approaches 500, a considerable increase from the 67 stores at the time of acquisition.

For 2016, Profi anticipates revenues close to €800 million, representing an impressive average annual EBITDA growth of over 30% from 2010 to 2016. The chain operates two store formats—Standard and City—while recently introducing successful Loco stores in rural regions. Profi gained recognition for being the first retail chain in Romania to target rural customers with a dedicated brand, successfully entering previously underserved areas.

Industry Overview in Romania

The retail industry in Romania has experienced substantial growth over the past decade, driven by rising consumer purchasing power and a growing middle class. The shift towards modern retail formats, including supermarkets and hypermarkets, has transformed the shopping habits of Romanian consumers, who increasingly favor convenience and a wider selection of products.

Romania's retail landscape has seen the emergence of several significant players, particularly as foreign investors enter the market, attracted by its robust growth potential. Despite the competitive environment, there remains ample opportunity for expansion and innovation, particularly in rural areas where modern retail has only recently begun to establish a foothold.

The evolving consumer preferences, combined with advancements in logistics and supply chain management, have been pivotal in shaping the future of the retail sector in Romania. Retailers are adapting their strategies to cater to the demands of a more sophisticated clientele, resulting in the emergence of various new concepts and store formats.

Moreover, the Romanian government's favorable policies towards foreign investments have further enhanced the attractiveness of the region for international retail chains. This positive environment underscores the potential for industry growth, making it an exciting time for both established players and new entrants in the market.

The Rationale Behind the Deal

The decision to sell Profi Rom Food is primarily driven by Enterprise Investors' successful track record in enhancing the company's value over the years. With a history of growth and a strong market presence, the sale provides a lucrative opportunity for Enterprise Investors to realize substantial returns on its investment.

Mid Europa Partners, specializing in Central and Eastern European buyouts, presents a strategic partner that can continue to support Profi’s expansion and development. Given the identified growth opportunities in the Romanian retail market, this partnership is anticipated to yield further successes for Profi as it continues to capture market share.

Information about the Investor

Enterprise Investors is one of the largest private equity firms in Central and Eastern Europe, having been operational since 1990. The firm has successfully launched eight funds, raising over €2 billion, with a significant portion of this investment directed towards retail sector companies. To date, Enterprise Investors has exited 116 companies, generating a gross revenue of €2.5 billion.

Mid Europa Partners, the acquiring firm in this deal, is a leading independent private equity firm with offices in London, Budapest, Warsaw, and Istanbul. The firm manages approximately €4.3 billion in assets, focusing on high-growth sectors across Central and Southeast Europe. Their expertise in the market and established presence positions them well to enhance Profi’s future growth.

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This transaction marks a significant milestone in the Romanian retail market, representing the largest private equity deal in the country’s history. The successful exit for Enterprise Investors not only highlights their capabilities in transforming companies but also demonstrates the robust growth potential in retail.

From an investment perspective, Mid Europa Partners’ acquisition of Profi Rom Food is a strategically sound decision. Profi's established market presence and ongoing expansions align well with the firm's growth objectives, making it an attractive addition to their portfolio. The continued demand for modern retail options in Romania further supports this positive outlook.

Looking ahead, Profi is well-positioned for further growth. Remaining white spaces in the modern retail landscape of Romania create opportunities for expansion into underserved regions. Understanding and leveraging these opportunities will be crucial for Profi's sustained success.

Overall, this deal signals a bright future for both Profi Rom Food and its new investors, positioning them for continued success in an evolving retail market.

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