The Riverside Company, an active private equity firm in the CEE region since the mid-1990s, is linked to Hungary via its founder, partner and management. Riverside has recently acquired yet another Hungarian company with high potential for growth, Diatron, a Budapest-based manufacturer of hematology analysers.
Diatron, which specializes in the development, manufacturing, and marketing of high-quality compact hematology analysers for the human and veterinary markets, represents a new platform for Riverside, which typically grows its acquisitions through organic means as well as by buying complementary acquisitions.
Diatron's cell counters and other equipment are currently used in almost 60 countries around the world.
Riverside Vice-President István Nagy talked with Portfolio.hu about the company's drives for investments and whether we should expect another IPO on the Budapest Stock Exchange (BSE).
A new USD 100 million fund.
Portfolio.hu: How would you describe Riverside?
István Nagy : Since its founding in 1988, riverside had nearly 120 leveraged buyouts and 15 deals only in 2005. Our goal is to acquire majority stakes in profitable, well-managed, market leading small- and medium-sized companies with enterprise values of less than USD 100 million, and partners with strong management teams to build companies through acquisitions and value-added growth
Riverside launched its operations in 1990 in Europe. At first it offered consultancy services for Central European companies when they were privatised or reorganised.
Riverside established its first European region specific investment fund, Riverside Central Europe Fund (RCEF) in 1997 with USD 25 million capital to invest. Instead of this region, the company began expanding its views on the whole of Europe as of 2003.
The Riverside Europe Fund II (REF II, acquisition period: August 2002-December 2005) invested a total of EUR 40 million and the Riverside Europe Fund III (REF III) is to have EUR 250 million to spend.
Portfolio.hu: Which were your main deals in the region?
István Nagy : Our already sold investments include dental materials maker Spofa Dental in the Czech Republic, abrasives producer Carborundum, Poland's interior paints maker Primalex, pressure gauge and thermometer maker KFM and construction material producer Megachemie.
Our Hungarian portfolio includes Salgglas, bought in 1997 and now Diatron, which we purchased in December 2005.
Portfolio.hu: Eight years after buying Salgglas it is high time to consider an exit... Have you thought about exiting via a public offering on the Budapest Stock Exchange (BSE)?
István Nagy : We had only one (partial) bourse exit in the region in the first half of 2005. Then we parted with a minority package in Polish industrial fittings maker Zetkama, with an IPO of USD 4 million. This company has proven its worth on the Warsaw Stock Exchange. While the stock price of a number of companies dropped since the 2004 IPO boom on the WSE, the price of Zetkama papers rose by 30%.
We do not believe the Budapest Stock Exchange is liquid enough for us to sell a company such as Salgglas on it. The majority of the companies in our portfolio are bought by strategic investors.
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