3i aims for CEE dominance

3i has beaten heavyweight opposition to land its first deal in central and eastern Europe, and is aiming high after launching a new team dedicated to the region.

3i, a listed UK private equity group, is set to become one of the biggest investors in central and eastern Europe in the next few years, after completing its first sizeable deal in the region.

3i, which is backing the buyout of regional printing group EDS, could invest up to €750 million ($998 million) equity across the region over the next few years, as it looks to build a dedicated team and actively target big deals in the region.

3i fought off competition from Mid Europa and Industri Kapital to win the auction for EDS, the region’s leading web-offset printer. The company’s chief executive Christian Senff and his chief financial officer Dr. Alois Bauer are leading the buyout of the company, which produces magazines and promotional literature for big retailers like Tesco and other corporate clients. It had revenues of about €40 million last year.

A source close to the deal said 3i was very keen on the sector and on the company, and as a result was able to pursue the deal very aggressively. This allowed it to beat two firms with a long track record of investment in the region.

However, 3i has no plans to stop there.

3i has made this investment from Eurofund V, the €5 billion buyout fund it closed last year. A fundraising source said up to 15 percent of this total could be allocated to central and eastern Europe. This would give 3i about €750 million of equity firepower, making it one of the biggest investors in the region.

The firm has also shown its ambitions in the region by recruiting Zoltan Toth, the former head of Advent International’s Hungarian office and one of the region’s most experienced deal-makers, to act as its on-the-ground presence. Toth will be based in Budapest and London and will form part of a new dedicated team, led by London-based partner Stuart McMinnies. 3i expects to increase its Budapest presence over the coming months.

The third senior member of the team is Wolf Wolfsteiner, another 3i veteran, who told PEO that 3i has ambitious expansion plans for EDS. “We want to grow the company geographically, into Romania, the Ukraine and possibly Russia.” This will require new manufacturing operations as well as distribution, he said.

3i’s CEE team plans to make about two investments per year, targeting sectors like consumer and infrastructure.