Rohlik.cz mandates Arma Partners for EUR 100m raise to accelerate international expansion - CEO

14 July 2020 - 08:05 am UTC

by Katka Krosnar in Prague

[The fourth paragraph has been amended to clarify that a potential secondary buyout may involve four minority shareholders.]

 

The Czech online supermarket Rohlik.cz has mandated UK-based Arma Partners to raise EUR 100m to accelerate its international growth, founder, CEO and majority owner Tomas Cupr told Mergermarket.

 

The company has already seen strong interest from tens of investors but the process is still at an early stage and it would like to hear from other interested parties including VC and PE funds and strategic investors, he said. It is particularly interested in investors with an overseas presence who can bring in foreign market insights, he said.

 

Rohlik.cz, which is targeting CZK 8bn (EUR 300m) revenues and EUR 8m EBITDA in the Czech Republic and CZK 1bn revenues in Hungary this year, plans to hold investor meeting roadshows in September, Cupr said. It aims to close the investment by the end of this year, he said.

 

The process has been planned as a EUR 100m fundraise in which existing shareholders would dilute their stake, Cupr said. This could be followed by a secondary buy-out involving an exit for four minority shareholders who currently jointly own 25% in Rohlik.cz, although this would depend on the offer on the table, he added.

 

The company is targeting EUR 5bn revenues in 2024, Cupr said, noting that it has achieved EUR 300m annual revenues in the Czech Republic, a relatively small country, alone.

 

Cupr declined to specify Rohlik.cz‘s valuation. According to a previous local report in April, the company valuation is about CZK 15bn (EUR 563m) but this has since risen significantly, Cupr said.

 

The fundraising will involve an unspecified minority stake with Cupr retaining a controlling stake, he said.

 

Expansion into Germany and Austria

 

The new funds will largely go towards supporting Rohlik.cz’s expansion into Germany and Austria, Cupr said.

 

Rohlik.cz will expand to Vienna, Austria, this October and Munich, Germany in 1Q21, Cupr said. It then plans to roll out in five German cities within 12 months, he said. Other markets of interest include Italy, Spain, the Benelux region and Romania, he said, adding that it is targeting cities with populations above one million.

 

The funds will be invested into building new distribution centres and on customer acquisition, he said.

 

While focusing on organic growth, Rohlik.cz is interested in acquisitions of peers that could accelerate its expansion, Cupr said, adding that it does not currently see any sizeable European peers that could be investment opportunities. However, the landscape is constantly changing and there could be interesting targets in future, he said. It is too early to say whether some of the funds could be used for acquisitions or whether it could use external M&A advisers for buys, he added.

 

Rohlik.cz last month announced the acquisition of an unspecified stake in Bulgarian peer eBag.bg for an initial EUR 1m investment. The Czech company has an option to raise its stake within three or four years, which could involve a total investment of EUR 10m to EUR 20m, Cupr said. eBag.bg shares Rohlik’s vision and is a good match, he said.

 

While remaining interested in opportunistic acquisitions, Rohlik.cz does not expect to make any more such acquisitions in the next year, he said.

 

On the other hand, it is interested in targets in the personalisation and technology space, in companies that do smart work with customers and manipulate marketing and websites, Cupr said. It is also interested in logistics targets and in small producers with niche products, such as manufacturers of vegan snacks, he said. Rohlik.cz previously acquired a Czech gluten free bakery, which involved a small investment of below CZK 10m, he said.

 

The current funding is the first formal fundraising round for the company although Rohlik.cz has raised a number of informal rounds from existing shareholders and has previously issued bonds, he said.

 

Senior management additions

 

Rohlik.cz recently strengthened its senior management team with the appointment of a new Czech CEO, a new group CFO and chief HR officer, as well as CEOs for its new Austrian and German operations. This frees up Cupr to focus on the company’s strategy and international expansion, he said. All the new management members bring in international experience. Both group CFO Sonia Slavtcheva and chief HR officer Daniela Razimova join the company from financial group Home Credit while Petr Pavlik, CEO of Rohlik.cz in the Czech Republic, previously worked for retailer Albert and was CEO of spirits group Stock Plzen.

 

The COVID-19 pandemic has accelerated Rohlik.cz’s customer acquisition by around six months, Cupr said. During the peak of quarantine restrictions, orders tripled as people opted to order online rather than going out to supermarkets, he said.

 

The company has 450,000 customers in the Czech Republic but this represents under 10% of the total grocery market in Prague and there is still significant growth potential in the domestic market, Cupr said.

 

As reported separately today by this news service, Rohlik.cz is weighing an IPO in 2025 after achieving its revenue targets.

 

Founded in 2014 by Cupr, Rohlik.cz delivers orders to homes and offices, as quickly as within 90 minutes. It takes its name from the popular Czech baked roll rohlik. Its offering of 16,000 items includes fresh, frozen and long-life groceries, household products, cosmetics and over the counter medicines and health products through its partnership with pharmacy Benu. It also has its own brand of fresh food products.

 

Cupr owns 75% of Velka Pecka, the holding company of Rohlik.cz, through Rohlik investment. Rohlik.cz’s other shareholders include Czech funds Miton and Enern. He previously founded discount portal Slevomat in 2010 and online restaurant home delivery portal DameJidlo in 2012. DameJidlo was sold to German-based Delivery Hero in 2010, as reported. Slevomat was sold to UK-based travel company Secret Escapes in 2017, as reported.

 

Rohlik.cz has 1250 workers including external workers.

 

Peers in the space include UK-based Ocado and REWE digital, the online arm of German retailer REWE Group, Cupr said.