Arx Equity Partners (“ARX”) held the first close of its third dedicated Central and Eastern Europe focused lower mid-market fund at € 83 million. ARX is targeting € 125 million for the fund’s final close. ARX III’s largest first close commitments came from the European Bank for Reconstruction and Development, the European Investment Fund and Alpha CEE II (a fund managed by Alpha Associates).
ARX III is the successor fund to DBG Eastern Europe II LP. DBG Eastern Europe rebranded as ARX and became fully independent in early 2008.
The ARX team of eight professionals is led by co-Managing Partners Jacek Korpala and Brian Wardrop. „ARX III represents a continuation of the strategy we have pursued over the past several years with DBG II; and our geographic focus and investment style are well-suited for the current market environment”, said Korpala. Wardrop added, „succession-driven dealflow in the CEE region is increasing for several fundamental reasons, and ARX is ideally positioned to capitalize on these opportunities”.
ARX III will target equity investments of € 3-15 million per transaction.
Recent ARX events reinforce the attractiveness of the CEE lower mid-market segment. On September 1, 2008, ARX completed an exit from its investment in Donit Tesnit in Slovenia, realizing a cash-on-cash return of 3 times and an IRR of 58%. Then, on September 26, 2008, ARX completed the concurrent acquisitions of two complementary businesses in the Czech Republic (Lanex a.s. and Singing Rock s.r.o.), in a succession-driven buyout. ARX secured acquisition financing for the transaction from ČSOB and UniCredit banks.