October 19, 2016 / 12:25 PM / in a year

Allegro's new owners say IPO an option, look for more deals in Poland

* Cinven, Permira and Mid Europa bought Polish Allegro last week

* The funds say Allegro’s IPO is an option in coming years

* While focusing on Allegro’s growth, they eye more M&As in Poland

By Agnieszka Barteczko and Jakub Iglewski

WARSAW, Oct 19 (Reuters) - The three private equity funds that bought Polish auction website Allegro from South Africa’s Naspers last week are targeting more investment in Poland and in the region, they said.

Cinven, Permira and Mid Europa bought Allegro and Ceneo from Naspers for $3.25 billion in one of Poland’s biggest takeover deal.

“We have looked at several potential assets in Poland and we continue to do so. However, we invest first and foremost on a sector basis. So we like Allegro as a TMT/e-commerce business,” Cinven senior principal Thomas Railhac told Reuters on Tuesday.

While Mid Europa has been present in Poland for over 15 years - retail chain Zabka is its flagship investment - the Allegro purchase is Cinven and Permira’s first in eastern and central Europe’s biggest economy.

“Of course we have asked ourselves questions about the situation in Poland. We do this whenever we enter any new geography,” Permira partner Richard Sanders said. But he added: “We feel very confident that the Polish economy will continue to grow strongly.”

Since coming to power last October the conservative Law and Justice party (PiS) has halted privatisations and questioned the rationale and pricing of the previous government’s stake sales.

The three said they were all looking at investment opportunities in Poland and in the region, although not necessarily together.

They declined to comment on whether they were interested in buying brewer SABMiller’s central and eastern European beer brands. Some global buyout funds are seeking to buy assets worth up to 7 billion euros.

They also declined to comment on any other potential deals.

“The fact that we joined forces on this particular opportunity (Allegro) does not mean that we will be doing it on any other or all other opportunities in the region for the future, although our cooperation was very good,” Mid Europa’s Pawel Padusinski said. Mid Europa is also preparing the sale of Zabka.

With over 14 million clients, Allegro competes with eBay and Amazon as well as e-commerce site OLX, which is also owned by Naspers.

“We want this business to be the No. 1 business in Poland’s e-commerce in the next three to five years,” Padusinski said.

Poland’s e-commerce market is expected to grow by 15 percent in 2016 to 35.8 billion zlotys and to 63 billion by 2020, according to Sociomantic Labs.

“Our usual investment horizon is five to seven years and this investment is no different,” Sanders said.

“(But) given the characteristics of the Allegro business, the brand on the Polish market, long-term growth prospects, it could be an attractive IPO candidate further down the line,” he also said. (Editing by Susan Thomas)

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