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Enterprise Investors pushes back Studenac auction to 2024 – sources

The sale of Enterprise Investors (EI)-backed Croatian grocery supermarket chain Studenac has been delayed to 2024, four sources familiar with the situation said.

The sale process, which was guided by JP Morgan, had been slated to start after the European summer break this year, according to a March report by Mergermarket, but unfavourable market conditions have seen the auction pushed back, two of the sources said.

Enterprise Investors is not working on the sale of Studenac and continues to focus on increasing the value of the company, a spokesperson for the fund said.

Pre-marketing efforts are now expected early in 2024 with a full-scale process kicking off around September 2024, once next summer's holiday financials are in, the third source said. Purchases made by tourists visiting Croatia account for a significant part of Studenac's annual sales, this source added.

It makes sense for EI to wait for full-year 2023 figures before launching a sale next year as the sector is doing well on the back of rising prices and margins as well as strong tourism traffic, the fourth source said.

The company has a score of 78, according to Mergermarket's Likely to Exit (LTE) predictive algorithm.* The score is heavily weighted towards previous intelligence from Mergermarket about a sale. 

Studenac aims to generate more than EUR 700m in revenues and EUR 55m EBITDA for this year, according to a recent Polish media report.

The recent collapse of the auction for Croatian do-it-yourself (DIY) products and consumer electronics retailer Pevex weakened investor sentiment in the retail sector, one of the sources said.

Another factor for the delay is to give Studenac more time to fully integrate the various smaller grocery chains it has acquired over the past few years, two of the sources said. 

While initial interest in Studenac was lower than expected, this was not a reflection of the asset’s quality, but rather the vendor’s high price expectations, one of the sources said. EI may be aiming for a multiple of 7x-8 x EBITDA or more but is more likely to end up with an around 6x multiple, this source added.

Once the exit process restarts, Studenac will attract interest from both strategic and PE funds, this source said. Croatia's entry into the euro zone in January 2023 has opened up the bidder pool as several potential buyers did not have mandates to invest outside of the Eurozone.

Enterprise Investors acquired Studenac in 2018 and has so far invested more than EUR 260m in the retailer and its expansion both organically and through acquisitions, according to an EI statement from May. Studenac is present in around 1,150 locations and employs 5,900 people, according to the statement.

JP Morgan declined to comment. Studenac did not respond to requests for comment.

by Mergermarket journalists

*Mergermarket's LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.