The sale of Bucharest-based La Fourmi supermarkets marks the start of a new phase in Global Finance's strategy, after the company exited retail (a low-profitability market), and entered the construction and pharmaceutical markets, which boast higher profit margins.
"Retail is quite a complicated sector and private equity funds are not dealing with it very well. It is a complex, dynamic field, characterised by low profitability," says Stefan Bucataru, investment manager with Global Finance.
In early April, Greek investment fund Global Finance sold its majority stake in La Fourmi through Black Sea Fund to Belgium's Delhaize group, which operates Mega Image supermarkets. The deal amounted to 18.6m euros, which also includes ownership rights to 4 of the 14 locations of the network, according to Delhaize data.
Having bought into the retailer three years before, when Black Sea Fund acquired 80% in the supermarket chain in the wake of investments worth some 4m euros, the Greek investors doubled the company's turnover during the period they held it, from 16m euros three years ago to over 30m euros in late 2007. The retailer's sale took the market by surprise, considering that in early February La Fourmi announced its intention to expand the network and acquire some domestic players. Bucataru explains, however, that a company needs to be sold while there remains room for growth.
"Global Finance entered Romania in 1996 and has so far invested over 150m euros through the funds it manages in direct or indirect projects aimed at the Romanian market," states Bucataru.
Besides its exit from Sicomed, the drug maker in which Global Finance invested over 34m dollars, the investment it operated in Orange Romania is among the Greek group's major deals in Romania. Bucataru chose not to specify the returns registered in the wake of the two investments.
