Local businesses started in the 90s were either to keep, to sell, or keep some and sell some. A special category is that of businesses which originated in Romania but expanded either regionally, or even at European level.
Local chains of stores have proven profitable in the last few years, as the retail carried out by local business people has proven successful.
A chain of local stores and food producer Cristim has been kept in local hands, despite offers to sell. Businessman Radu Timis started the Cristim chain in 1992, by opening a 12-sqm store, and two years after opened the first meat products factory. The company has meanwhile created several brands of its own and has added three new factories, with an additional farm for supplying its factories. The company has decided to focus less on growing a chain of stores, and more on production and on supplying its products to other retailers.
The company has become the biggest meat products maker in Romania, with an expected turnover of EUR 90 million for 2007. Its expected operational profit was EUR 7.2 million from meat processing activities alone. Timis has recently decided to invest in real estate as well.
Bacau-based businessmen Dragos and Adrian Paval started Dedeman group in 1992 and have built a chain of do-it-yourself stores mainly concentrated in the Moldavian part of Romania. They do however plan to expand it even on the Bucharest market, thus competing with foreign DIY chains.
The company includes, apart from the Dedeman stores, which bring the bulk of the business, Dedeman Trucks and Dedeman Automobiles.
For 2007, the firm targeted EUR 170 million in turnover, up 50 percent on 2006. It has benefited from the increasing demand for construction materials due to the booming local real estate market. Starting as a regional chain in northeast and east Romania, Dedeman plans to go nation wide and for the moment has no intention to sell the business. With nine stores operating across Romania, Dedeman accounted for a profit of EUR 7 million in 2005, at a turnover of EUR 75 percent, and has kept its profit at a rate of 10 to 13 percent of the turnover in the meantime.
A similar type of businesses is that of Arabesque, set up in 1994 by businessman Cezar Virgil Rapotan. The company distributes construction materials and is the biggest locally owned company, in terms of turnover. Arabesque posted around EUR 450 million in turnover in 2007, after having expanded outside the country and having bought a similar player in Ukraine. Last year, it started greenfield developments in Serbia and Bulgaria. The company targets a turnover of EUR 1 billion by 2011-2013.
Arabesque runs distribution centers in Cluj, Timisoara, Brasov, Constanta, Iasi, Craiova, Ploiesti, Galati, Piatra Neamt, Bacau, Oradea and Baia Mare, with over 180,000 sqm of warehousing.
It plans to open a network of five sales centers in Bulgaria under the Budmax brand, recently acquired on the Ukraine market.
Outside of Romania, Arabesque operates in the Republic of Moldova, Ukraine and Bulgaria.
The DIY chain operator, started in 1994 by businessman Ioan Ciolan, with a focus on the western and southwestern part of Romania, runs 14 Ambient stores and plans to open 12 new ones by 2010. The group of companies expects EUR 335 million in turnover for 2008, up 40 percent on the EUR 240 million registered in 2007. Last year, the company also registered an almost 40 percent increase in turnover. By 2010, Ambient plans to invest EUR 135 million in opening new stores.
Ambient has Ciolan as major shareholder, with 75 percent of the shares, while Gheorghe Calburean holds 12 percent of the shares. The remainder are controlled by other local business people. Calburean is also known for setting up Dafora Medias and Condmag Brasov.
Sibiu businessman Ilie Carabulea is the major shareholder of more than two companies in Romania, but the best known are Banca Carpatica, one of the two remaining private local banks, and Atlassib, working in tourism and hotel business.
Carabulea has kept his businesses in his hands, but now finds it timely to sell Banca Carpatica. The bank was set up in 1999 and has 225 branches in the country. Listed on the Bucharest Stock Exchange – the Rasdaq market – it was aiming for a 2 percent market share in 2007. Although a small bank, it can provide its owner with a good exit, as it may be targeted by foreign financial institutions which have missed previous opportunities to make a market entry and don't want to start greenfield in Romania.
In 2006, the bank posted EUR 5.7 million in profit, but it fell to EUR 2.2 million in 2007, due to investments in the branch network. The bank has doubled the number of branches in the last two years, in an attempt to increase market share, asset wise.
Carabulea's other line of business, transport company Atlassib, posted EUR 90 million in turnover in 2007, up 25 percent on 2006, five percent below Carabulea's initial estimations. The company reported EUR 8 million in net profit, and, according to its owner, is not yet for sale. It was set up in 1993.
The entire Atlassib holding, which gathers companies in various line of business, posted EUR 270 million in 2007. Carabulea is also investing in hotels which have been opened under the Ramada brand.
Local businessmen Cornel and Ilie Penescu, based in Pitesti, started PIC group in 1991. The group now runs several hypermarkets in various Romanian cities and also food factories. It is the only local hypermarket operator, on a market dominated by foreign players. The next step for PIC is to enter the capital. The retailer was expecting a EUR 115 million turnover for 2007, up 40 percent on the previous year.
It runs four hypermarkets and plans to add three more to its chain. While its focus has been more on production, PIC plans to invest more in expanding the store chain. The Penescu brothers have been approached by both Carrefour and Tesco to sell, but they have refused.
Several local businesses their owners have decided to keep have increased locally in the last years and are now expanding in the SEE region. Dan Ostahie's IT&C retailer Altex is one example. The company he created in 1993 is now expanding in Bulgaria. It started with 50 stores in 1997, and reached 120 in 2006.
Altex has become one of the top local players, with a EUR 317 million turnover last year, up 39 percent on the previous year. Altex runs Media galaxy stores, Altex Megastores and Digit'Up formats.
The company is the biggest household appliance, electronics and IT&C retailer on the Romanian market.
Mobexpert is another example of a locally-born business which has crossed the border to neighboring countries. Set up in 1993 by Camelia and Dan Sucu, the Mobexpert furniture business went from selling furniture to producing it. The company now runs 33 stores in Romania and one in Bulgaria, where it expended last year. Mobexpert plans to operate 26 stores regionally by 2011.
The company also operates eight furniture factories and exports some of its products. Mobexpert increased its turnover last year by 12 percent on 2006 to EUR 168 million, and expects a 10 percent boost in turnover for 2008. The company's exports decreased last year by 11 percent, accounting for 27 percent of the total sales. This trend will continue in 2008.
The hotel market has attracted many local entrepreneurs. Some of them started directly with hotels, others went to hotels after developing other types of businesses. The latter was the case with local businessman George Copos. He started Ana Holding in 1990 as a family business, and in time expanded its activity from small confectionery to Ana Electronic, importer and distributor of consumer electronics, electric home appliances, IT and computer products.
In 1996, Ana Holding became shareholder in mobile operator MobiFon, formerly known as Connex and now active under the Vodafone brand. Copos begun his investments in the hotel industry in 1996, and now owns several hotels in seaside and mountain resorts, as well as in Bucharest. Ana Holding controls two five-star hotels Hilton and Crowne Plaza in the capital city, which together made a EUR 24 million turnover in the first nine months of 2007.
Copos has kept all his businesses close and has not sold any assets, except for shares in MobiFon, sold to Vodafone in 2005.
Telecom company RCS&RDS, set up in 1994 by Zoltan Teszari as a cable operator, has added telecom to its mix with landline services, data and internet services and more recently, mobile telephony operations. The company started in Romania but has expanded to Slovakia, Ukraine, Hungary, the Czech Republic and Croatia, and has acquired several operators abroad and in Romania as well, mainly on the internet services segment.
Teszari now controls 60 percent of the company and was planning to list the company on the London Stock Exchange, but has delayed plans due to the unfavorable international financial situation. The group registered $297 million in turnover in 2006, with an operational profit of $109 million.
Keep some, sell some
Retailer and distribution group RTC, founded and controlled by businessman Octavian Radu, has opted for a “keep some, sell some” approach. After growing its business in the last 15 years from stationery, bookstore, retail, distribution and IT&C, Radu decided to sell parts of it, focusing on others and entering new segments. The holding numbered 50 companies but has started to sell some of them, after the head re-organized the company.
RTC, owner of Diverta stores, sold Best Distribution, Aqua Regis and Pay Point, and will cast off three business lines by the end of 2008 and list a package of 25 percent of the group, or some divisions, on the BSE.
The activity of the group will be more focused, especially on distribution and retail, after it brought the Debenhams brand to Romania. Currently two stores have been opened under this brand.
RTC Holding reached EUR 261 million in turnover in 2007 and is expected to increase it to more than EUR 300 million in 2007.
Former local tennis player Ion Tiriac started doing business in Romania in 1990 and has built a holding which gathers companies in the banking sector, insurance, leasing, real estate, retail and auto. He has teamed up with foreign players which entered the local market from an early stage – like Metro Cash & Carry, for example, and insurer Allianz.
Tiriac started working on real estate in 1994 and is now focusing on real estate projects through Tiriac Imobiliare, which plans to put more than EUR 1 billion into development in the coming years.
Although he decided to keep the company under local control, Tiriac has previously sold assets. Ion Tiriac Bank, set up in 1991, merged in 2005 with HVB Bank and went on to create the existing UniCredit Tiriac bank.
Banca Transilvania is the biggest local bank majority owned by private individuals, although since 2001 the European Bank for Reconstruction and Development has held 15 percent of its shares. A BSE-listed company, Banca Transilvania was set up 14 years ago by several Cluj- based business people. The bank has slightly expanded country wide and has added other entities to the group. One of them, BT Asigurari, was sold last year to French insurer Groupama in a deal worth EUR 90 million.
The bank numbers over 460 units countrywide and has reported EUR 102 million in net profit on 2007, almost three times the figure reported in 2006. Its assets were worth EUR 3.8 billion in 2007, making it the fourth largest bank in Romania, assets wise.
EBRD holds the biggest share package in the bank, with 15 percent. Other important shareholders in Banca Transilvania are Horia Ciorcila, the president of the administration council, with five percent, and Robert Rekkers, CEO, who owns less than one percent.
Tiberiu Urdareanu, who created physical security, IT and communication systems group UTI, decided to sell 30 percent of the company to investment fund AIG New Europe Fund, for $20 million in 2005. The sale came 15 years after the group was set up by Urdareanu, who had controlled 97 percent of the group prior to the sale.
UTI is now 25.5 percent controlled by AIG, with Urdareanu holding 59.9 percent of the shares, and the remainder staying in UTI employees' hands.
The group, including more than ten companies with activities in Romania, the Republic of Moldova, Italy and Holland, posted EUR 120 million in revenues in 2006, and was hoping for EUR 450 million in revenues by 2010.
Up for sale
Local chain of supermarkets Artima was created in 2001 by businessman Florentin Banu, with the money he got from exiting another business he had created from scratch. Four years after creating Artima, Banu sold the business for EUR 17 million to investment fund Polish Enterprise Fund (PEF).
Artima started with some EUR 1.9 million in turnover in 2001, to reach EUR 9.5 million in 2002. The increase has been gradual ever since, with two-fold increases year-on-year. When Banu sold Artima, the company was making EUR 34.6 million in turnover. After being held by the investment fund, the Artima chain was sold last year to French retailer Carrefour, which is now preparing to rebrand it.
When sold to PEF, the Artima chain featured 14 stores in 13 cities in western Romania, and Banu had reached breakeven point at store number ten. In time he diluted his stake in the firm by taking on other partners, and Artima's founder got $5 million from the deal with PEF.
Banu was no stranger to starting a business from zero and selling it to an international player. In 1994, with a EUR 50,000 investment, he created and produced Joe Wafers. In 2000, he sold the business, which brought EUR 1.5 million of annual profits, to Nestle for $8 million. Joe had become the most important brand in Nestle's portfolio in Romania. Banu went on to invest in real estate, among other areas.
Household appliance, electronics and IT&C retailer Domo Retail was founded by Lorand Szarvadi, Zsuzsanna Szarvadi and Ferenc Hegedus in 1997. The first store under the Domo brand was opened in 1997.
In 2004, when the company was making EUR 100 million in turnover, investment fund RAEF bought 20 percent for $10 million.
Balkan Accession Fund investment fund also acquired a minority share package in Domo. The most recent exit from the business came late last year, when investment fund Equest Balkan took over 75 percent of Domo, in a deal valued at EUR 62.5 million.
Domo Retail, which now operates Domo and Technomarket units, posted a turnover of EUR 193 million in Romania in 2007, representing a 58 percent increase on the previous year. Domo Retail accounted for an operating profit of EUR 12.9 million and a net profit of EUR 8.5 million, down 14 percent on 2006. Local software companies or online businesses have been attractive investment targets for foreign investment funds.
Gecad, created by businessman Radu Georgescu in 1992, has sold one of his software- RAV Antovirus- to Microsoft. More recently, Gecad welcomed institutional players in its shareholding structure. Global Finance and 3TS Cisco Growth Fund III have taken over 11.7 percent in
one of the companies in the Gecad group.
Online recruiting site E-jobs.ro was subject to a transaction with 30 percent of its parent company's shares last year, when investment fund Tiger Global paid EUR 4.2 million for the participation in the company. The website, created and launched in 1999 by Liviu Dumitrascu and Daniel Tatar, was to reach EUR 2.3 million in turnover in 2007, up three times on the results in 2006. The same investment fund, in partnership with Dutch fund Wouwer has bought another online recruiting platform, Neogen.ro, in a deal worth over EUR 5 million.
Telecom operator Astral, now controlled by US-based UPC, was the creation of several Cluj-based businesspeople in 1993, when it started out as cable operator. Before being sold to UPC in 2005 for EUR 340 million, Astral had teamed up with various investment funds to finance its expansion. The company has bought or merged with local cable operators across the country and has also entered the internet segment. Prior to the deal with UPC, Astral was evaluated at some EUR 370 million. After the deal, Astral has become the biggest cable operator in Romania. Astral's turnover in 2006 was of EUR 160 million.
Recently taken over by US real estate firm CB Richard Ellis, the local Eurisko is the biggest local real estate consultancy firm working on the Romanian market. Its creators, businessmen Ionut Dumitrescu Gabriel Marchievici, have managed to keep it local until this year, when it went to foreign hands for $35 million.
The company, set up in 1997, posted a EUR 14.3 million turnover in 2007 and estimates a growth of 75 percent for this year, to reach a turnover of EUR 25 million.
Software company Softwin was set up in 1992 as a local software company, but it has managed to become one of the few multinational companies having originated from Romania.
Mariuca and Florin Talpes, who have set up Softwin, have managed to run the business without placing it into foreign hands. Softwin, well known for the Bitdefender antivirus program, previously sold platforms the company had created, but not shares in the company.
However, last year a group of seven Romanian and American investors have bought approximately seven percent of BitDefender, Romania's well-known worldwide antivirus company. The value of the deal was USD 7 million. It was the first time when Softwin Group had opened itself up to other investors and added that it was possible to draw other investors to BitDefender, the IT consultancy company Ascenta and Intuitext from 2008. According to Florin Talpes, it is very likely that BitDefender will be listed on a Romanian, European or US stock exchange, by the end of 2008 or the first half of 2009. He company wants to be among the top five world players on this market by 2010. BitDefender broke away from mother company Softwin in the second half of the year. It runs units in America, the UK, Germany, Spain and Romania.
BitDefender has opened a second office in the US, after the office in Florida. It is located in Mountain View, Silicon Valley.
Rompetrol, the local oil company privatized in 1993 through the MEBO system, has started to become an international group of companies in 1999, one year after businessmen Dinu Patriciu bought the majority share package in the company. After buying oil refineries in Romania, the group expanded regionally and started to float companies in the group on the BSE.
In 2005, Rompetrol group bought French state-owned oil distributor Dyneff, with operations in France and Spain. For many years, although registered in the Netherlands, Rompetrol group was majority owned by local businessmen Patriciu. He and his partner Phil Stephenson have however sold the majority share package in the company last year to Kazakh oil company KazMunai Gaz. The Kazakh company acquired 75 percent in Rompetrol, valuing the company at $3.6 billion. The group numbers 40 companies and is active in 13 countries.
Following the sale, Dinu Patriciu has also become the richest Romanian businessmen, with an estimated wealth over $3 billion.
By Corina Saceanu