RALFI, Motoractive, Domenia Credit
Motoractive was set up in 1998 as a greenfield company by RAEF and two other private equity funds and commenced business in June 1999. In October 2002, RAEF bought the other funds’ shares. When the fund exited, Motoractive was the largest Romanian independent (not bank or vendor owned) leasing company, with 5% market share in 2006 and a national coverage in Romania through more than 10 regional offices.
RALFI/ Estima Finance started in 1997 in the city of Cluj as a local small player. When the fund exited, the Company was the third largest consumer finance specialist in Romania.
Domenia was a green-field project initiated by the Romanian American Enterprise Fund which turned into the largest Romanian specialized mortgage company.
All 3 companies were sold in 2006 to GE Money, a division of General Electric Corporation.
|Fund||Romanian American Enterprise Fund|
|Entry||Motoractive: September 1998
RALFI: November 2002
Domenia Credit: February 2003
|Fund’s Return||Total: 7.7x cash on cash|
|Fund’s Contribution||All 3 companies had an impressive growth after the Fund took the controlling position or established the Company (in the case of Domenia). The CAGR was of 83% for Motoractive, 234% for Ralfi/Estima Finance and 106% for Domenia Credit
In 2002, RAEF became a controlling shareholder and, with a new management team and a new strategy, the company started the execution of an impressive growth plan throughout the coming years. The drivers for Motoractive’s outstanding growth were the high quality of its personnel and the increasing access to large volumes of efficient funding from foreign and domestic banks and IFIs. The total value of financed assets increased at a very fast pace, from €17.2 million in 2002, to €128 million in 2005.
Year 2003 marked the taking over of the controlling shareholding position by RAEF. RAEF changed the strategy of the company, shifting its focus from a regional presence to national coverage. Following this change in strategy, in Q4 2003 the company signed a strategic partnership with DOMO Retail SA, one of the three largest “households appliances” retailers in Romania with more than 100 stores in 70 cities. The newly introduced product was non-recourse financing (intermediation for banks) that permitted the financing of all contracts originated in DOMO network.
In 2003, the Company had €1 million in Total Assets and 8 employees and, at the Fund exit in 2006, the Company reached €80 million in Total Assets and had 350 employees.
Domenia undertook from inception a pioneer and leadership role on the Romanian financial services market, positioning itself and being recognized as the “mortgage specialist” in the sector. Being the first mortgage institution to standardize its origination procedures in view of future securitization of its assets, Domenia effectively blended the Western origination and underwriting standards with the local conditions resulting in sound origination procedures. Furthermore, Domenia had a leading role in developing the Romanian mortgage market in terms of legal and institutional framework by working together with the regulatory/legislative bodies.
At exit date, Domenia had 2.5% of the Romanian origination residential mortgage market and the Bucharest branch of Domenia reached a 5% share of the origination of the Bucharest residential mortgage market. Domenia’s portfolio amounted to over €18 million, representing 1.33% of the outstanding residential mortgage loans at that date. The result was achieved in approximately 2 years with only 4 locations, a completely new brand in the market and in a competitive environment.