Chances of a lifetime for investors
Siret Soom
Partner, IPC Investment Group

History has proven that the biggest fortunes have been made during times of crises, not prosperity. History repeats itself - as a result of the present crisis, a large part of the assets in the world will also be reallocated. IPC has decided to take the side of acquirer of assets and grower of wealth in this process. We are distributing this issue of Inside in the belief that we share the same ideas and wishes as you.
We are all aware of the current situation - because of a high loan burden many fundamentally successful companies are facing liquidity problems and are on sale at extremely affordable prices. Or the owners of companies have used short-term loans to finance their long-term projects and are compelled to sell their assets quickly under the current loan burden.

Romania is going strong
Last year, IPC adopted a very cautious attitude towards new investments; instead, we exited from investments in Bucharest and distributed over 15 million euro to our investors. Part of this money will certainly be reinvested in new projects in Romania in the coming months - now the time has come to invest again. Such opportunities to buy may simply not be available in the next decade. It also deserves to be mentioned that our investors have become more active over the past weeks: many of them have recognised that there are unique opportunities out there and wish to make use of them. Although we might not be on the lowest point of the decline curve, the rise of global stock markets in March and April clearly signalled that it is time to act. Stock markets have always been the first indicator.
The arguments in favour of Romania include the domestic consumption of a large market, low loan burden of private sector, relatively low salaries, which continue to attract manufacturing industry from Western Europe, and major investments in infrastructure, particularly road construction.
In March, Romania secured for itself a loan package of 20 billion euro, put together by the IMF, European Union, World Bank and EBRD. We believe that the IMF funding will boost further reforms in the country and reduce government expenditure. The position of the IMF and its co-financers enable them to enforce unpopular decisions, which have so far been impeded by local political controversies.

Specific plans
IPC is actively analysing and negotiating the purchase of several manufacturing and servicing companies. We hope to achieve the first results in the first half of the year. Many projects are being considered, but only 2-3% of the companies are likely to pass the intensive selection process. Since the beginning of March, our investment team has worked practically non-stop, visited several companies, interviewed their managements, analysed respective market segments and the results of the companies and their future prospects. Close cooperation to find takeover objects is under way with the banks, law offices and consultants operating in Romania and with our connection network.
We have identified the first acquisition targets, which meet the criteria set by us: considerable growth potential, balanced risks, opportunity to acquire a majority shareholding and thereby ensure control over management. The price of the company and our own interest in its area of activity are also very important.
Our soon to be four-year experience in Romania has provided us with a strong network of relationships and confidence in managing investments. We are familiar with the legislation, taxation system and the peculiarities of local business culture. We have a strong team and management potential to support the companies to be acquired both through experience and skills in financial management, legal affairs, marketing, sales and negotiations. The partnership developed with our out of house consultants also plays a role.
Dear friends, let history repeat itself and let us seize the opportunity.